Dual Aspect Concept of Accounting

Dual aspect is the foundation or basic principle of accounting. It provides the very basis for recording business transactions into the book of accounts. This concept states that every transaction has a dual or two-fold effect and should therefore be recorded at two places. In other words, at least two accounts will be involved in recording a transaction.

For example Tom started business with a sum of $50000; the amount of money brought in by Tom will result in an increase in the assets (cash) of business by $ 50000. At the same time, the owner’s equity or capital will also increase by an equal amount. It may be seen that the two items that got affected by this transaction are cash and capital account. In the same way suppose tom buy goods of $20000 on credit then at one hand assets will increase by $20000 and on other hand liabilities will increase by $20000

The duality principle can be expressed in terms of fundamental Accounting Equation that can be written as follows: Assets = Liabilities + Capital

In other words, above equation states that the assets of a business are always equal to the claims of owners and the outsiders. The two-fold effect of each transaction affects the above equation in such a manner that the equality of both sides of equation is maintained.

Dual aspect concept from the core of accounting and hence it is very important concept which one should always keep in mind while handling books of accounts