Question

State whether the following statement is 'True' or 'False':
In accounting, all business transactions are recorded as having dual aspect.

• A. True
• B. False

Answer 1

The correct option is A True

Double Entry System of Accounting is based on dual aspect. That means, for every business transaction, there are affects in books of account. For every debit entry, there will be a credit and vice versa.

Accounting Equation can be defined as:

Owners Equity+Liabilities=Fixed Assets+ Current Assets

If Good worth Rs.10000 purchased on credit, it will affect two accounts i.e. Goods account and liability account.

Now Accounting equation will be as under:

Owners Equity+Rs.10000 (Liability) = Fixed Assets+ Rs.10000 (Goods).