Question

The accounting equation is based on __________.

• A. Going concern concept
• B. Dual aspect concept
• C. Money measurement concept
• D. All of the above

Answer 1

The correct option is B Dual aspect concept

Dual aspect concept is the basic concept of accounting, According to which every business transactions has a dual effect. As the name implies , the entry made for each transaction is composed of two parts- one for the debit and the other for the credit. Every debit has an equal amount of credit. So, the total of all debits equal to the total of all credits. This gives basic accounting equation:

Assets = Liabilities + Capital.