Why are the total of two sides of the balance sheet equal ?
(a) Cost Concept
(b) Dual aspect concept
(c) Entity concept
(d) All of the above
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Answer:
(c) Entity concept is the Right answer of the question.
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The total of two sides of the balance sheet is equal because of the dual aspect concept. (Option b)
- In accounting, the dual aspect concept states that each and every transaction a business enters into has two equal effects.
- During a transaction both the credit and debit sides are involved which ensure the accuracy of activities.
- This concept also forms the ground of the system of double-entry and is used worldwide for recording business transactions.
- This leads to an equal total of the two parts of any balance sheet.
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