Explain the system of accounting which is based on dual aspect concept.
Double entry system is based on the dual aspect concept. It is a complete system as both the aspects of transactions are recorded in the books i.e. debit and credit such as receiving of a benefit and giving of a benefit. For every debit, there is always an equal credit. Therefore, in every transaction, one account is debited and the other is credited.
For example, when an enterprise receives cash from bank as loan, it records a debit for an asset account i.e. cash on hand as well as a credit to a liability account which the bank loans. This system is highly useful for both small as well as big business groups.
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