Which transaction illustrates the dual aspect principle without changing the total assets of a business?
Correct answer: A. A debtor pays an outstanding account
- A. A debtor pays an outstanding account
- B. The owner contributes additional cash
- C. The business purchases goods on credit
- D. The business pays an outstanding loan
Explanation
When a debtor pays, cash increases while receivables decrease by the same amount. Total assets therefore remain unchanged, although their composition changes.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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