Accounting Concepts

Question 1

What is the Business Entity concept

Answer 1

“Only transactions affecting the business must be recorded in the accounting system”

Question 2

what does the Business Entity concept mean

Answer 2

The owners private financial affairs must be kept separate from the accounts of the business and it is the reason a Sole Trader keeps a Capital account and a Drawings account

Question 3

What is the dual aspect concept

Answer 3

“Every transaction affects 2 accounts”

Question 4

What does the dual aspect concept mean

Answer 4

Every transaction requires two entries - a debit entry in one account and a credit entry in another account