Commercial Applications
With reference to the Dual Aspect Principle identify the correct option:
- Assets = Capital - Liabilities
- Liabilities = Assets + Capital
- Capital = Assets + Liabilities
- Capital = Assets - Liabilities
Answer
Capital = Assets - Liabilities
Reason — The Dual Aspect Principle gives rise to the accounting equation: Assets = Liabilities + Capital. Rearranging this equation gives Capital = Assets − Liabilities. This equation always holds true at any point of time and ensures that both sides of the Balance Sheet are always equal.
Related Questions
Ledger is also called the ……………
- Journal book
- Principal book
- Account book
- Subsidiary book
The retirement of manager of the company cannot be recorded in the book of accounts, because it is not possible to estimate the financial effect of retirement. Which accounting principle would be applicable for the above statement?
- The Going Concern Concept
- The Business Entity Concept
- Money Measurement Concept
- The Dual Aspect Concept
Which accounting principle specifies that business will exist for an indefinite period of time?
- The Money measurement principle
- The Business entity principle
- The Dual aspect principle
- The Going concern principle
What is accounting cycle?