Explain (i) The Dual Aspect Principle (ii) The Going concern concept.

(i) The Dual Aspect Principle — This principle states that every transaction has two equal and opposite effects — there must be a giver of benefit and a receiver of the same. Hence every debit has a corresponding and equal credit. For example, if X purchases a car for ₹3,00,000, one account (Car A/c) is debited and another account (Cash A/c) is credited with ₹3,00,000. This principle gave rise to the Double Entry System of book-keeping. It is because of this principle that both sides of the Balance Sheet are always equal and the accounting equation always holds true:

Assets = Liabilities + Capital or Capital = Assets − Liabilities

(ii) The Going Concern Concept — It is assumed that the business will continue to exist for an indefinite period of time. Transactions are recorded on this assumption. Because of this assumption: (a) fixed assets are recorded at original cost less depreciation, not at market value, since they are not meant to be sold in the near future; (b) a distinction is made between capital and revenue expenditure; (c) outsiders are willing to enter into long-term contracts with the firm; (d) existing liabilities are assumed to be paid at maturity; and (e) unsold stock is carried over to the next year. A firm is said to be a going concern when there is neither the intention nor the necessity to wind up its affairs.