Question

The double entry concept is that A.assets + liabilities = capital B.capital � liability = asset C.capital = assets � liabilities D.none of the above​

Answer 1

CORRECT QUESTION :

The double entry concept is that

A. Assets + Liabilites = Capital

• B. Capital + Liabilities = Assets

• C. Capital = Assets - Liabilities

• D. None of the Above​

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ANSWER :

❖ B. Capital + Liabilities = Assets

• ➺ The double entry concept is that Capital + Liabilities = Assets

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EXPLANATION :

The Double Entry System is based on the Dual Aspects Concept. Dual Aspects Concept expresses the relationship between Assets, Liabilities and Capital. It says that the Total Assets of a firm is equal to the Total Liabilities and Capital of the firm. This can be expressed as an equation, known as Accounting Equation.

The Accounting Equation is :-

• ★ Assets = Liabilities + Capital

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KNOW MORE :

❒ Double Entry System :-

• ➮ The Double Entry System was first evolved by Fra Luca Pacioli.

• ➮ Double Entry System recognises the fact that there are two fold aspects in every business transactions.

• ➮ The basic principle followed under Double Entry System is that every debit must have a corresponding credit. The amount of the debit side must be equal to the credit side.

• ➮ Double Entry System recognizes the fact that there are two fold aspects in every business transaction.

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❒ Dual Aspects Concept :-

• ➮ Dual Aspect Concept is the very foundation of present accounting mechanism which is the Double Entry System of book-keeping as Dual Aspect Concept states that there are Dual or two aspects which is effected by each transaction.

• ➮ According to Dual Aspect Concept, every business transaction has a double effect, i.e., two sides.