Question

Every business transaction affects at least _______ accounts.

• A. One
• B. Two
• C. Three
• D. Infinite

Answer 1

The correct option is B Two

Double entry system of accounting is based on the dual aspect concept. Dual aspect concept defines that every transaction gives two affects or every business transaction affects at least two accounts. One in debit and another in credit side.

For example, Goods purchases for cash of Rs.2000

In this transaction, two accounts i.e. cash and purchases are affected. Cash and purchases are both real accounts. Rule for a real account is "debit what comes in and credit what goes out".

Accordingly, in this transaction, goods are coming in the business and against that cash is going out. Accounting entry will be passed as under:

Purchases A/c Dr.

To Cash A/c