Question

6.When a machinery is
purchased for cash, the cash
balance is reduced and to that
extent, the amount of
machinery as an asset is
recorded. This is done to follow
which of the following
accounting principles: *
1) Dual Aspect Principle
2) Materiality Principle
3) Timeliness Principle
4) Consistency Principle​

Answer 1

This is done by following the accounting principles of the Dual Aspect Principle.

What is the Dual Aspect Principle?

• The dual aspect principle states that recordation is necessary for every business transaction.
• In double-entry accounts, this system serves as the basis for the efficient functioning of the system.
• All financial statements use this system since the time it has been around to produce reliable frameworks.

So, the correct answer is the Dual Aspect Principle.

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Answer 2

When a machinery is purchased for cash, the cash balance is reduced and to that extent, the amount of machinery as an asset is recorded. This is done to follow which of the following accounting principles:

1) Dual Aspect Principle

2) Materiality Principle

3) Timeliness Principle

4) Consistency Principle​

The correct answer is :

1) Dual Aspect Principle

Explanation :

• When a machinery is purchased for cash, the cash balance is reduced and to that extent, the amount of machinery as an asset is recorded. This is done to follow Dual Aspect Principle accounting principles.
• The dual aspect principle clarifies that in a business in which a transaction is carried out, any transaction made in it affects two different aspects. These aspects may be similar or opposite in nature. So this dual aspect concept forms the basis of the double entry account.
• Double entry accounts are used by any accounting system to generate accurate and reliable financial statements. In the dual aspect concept it is clear that there is a dire need to record the transaction of each business in two separate accounts.

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