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Duality Concept

According to this concept, every transaction has two effects or aspects and we have to record the both effects or aspects of the transaction

As we know every financial transaction has two effects something always "gives" and something always "receives" we have to record the both aspects of a transaction. Double entry simply implies that each transaction should be recorded twice in the books of accounts


A firm purchased equipments for $2500. In this case, equipments should be recorded in equipment account and cash in cash account. Therefore, there are double aspects of that transaction and we can say that increase in Firm's equipments (Asset) and decrease in cash (Asset) of firm

Importance of Duality Concept

Reproduction of accounts from incomplete record is possible due to the fact that commercial accounting is done on the basis of double entry system and there are always high chances that one aspect of the financial transactions would be available to the business which can be used to produce accounts and financial statements

Duality or Double entry system helps trace out errors and mistakes in recording the transactions or economic events in the books of accounts

Implementation of double entry system helps identify different type financial frauds, embezzlements and misappropriations because recording a transaction twice in the books of accounts makes it difficult to commit misappropriation

Pursuing duality concept results in the availability of full information about assets, liabilities, capital, income and expenses

It is because of double entry system that the trial balance can be prepared to check the arithmetic accuracy of accounts

Separate Entity Concept or Business entity concept

This concept forms the basis of accounting principles or concepts. It implies that for the purpose of accounting ‘the Business is treated independently from the Owners'.

This means that although anything owned by the business belongs to the owner(s) of the business and anything owed by the business is payable by the owner(s) but for accounting purpose we assume that the business is independent of its owners


If a business purchases a machine or piece of equipment, it will own and obtain benefits from that Equipment. Likewise, if a business borrows money from ‘someone’ it will have to repay the money. This Someone includes even owner of the business. The treatment of business independently from its owners is called the ‘Separate Entity Concept’

Importance of Business entity concept or Separate Entity Concept

Business entity concept is significant since it forms a base or foundation for other accounting concepts or principles

Business entity concept helps determine the true and fair view or financial position of a business by making a business as an independent entity which implies that personal property of owners does not get counted while preparing the financial statements

It is helpful in determining the true figure of profit or loss for an accounting period since owner’s personal expenses and revenues are overlooked