i. The double entry system is based on the “Dual Aspect” concept. ii. Bank overdraft is an asset of the business.

Question

i. The double entry system is based on the “Dual Aspect” concept. ii. Bank overdraft is an asset of the business.

State whether the following statements are true or false with reason:

i. The double entry system is based on the “Dual Aspect” concept.

ii. Bank overdraft is an asset of the business.

Monjur Alahi

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2025-01-04 04:42

1 Answers

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Salim Ahmed Kawsar · Accepted Answer · 2023-02-05T15:29:48+06:00

i. This statement is True.

This accounting concept explains that every business transaction has two aspects viz. (i) acquisition or increase in the asset of the business and (ii) creation or increase in claims against the business. Assets refer to the valuable things owned by the business. Capital refers to the proprietor’s contribution to the business to provide funds to undertake activities. Capital refers to the proprietor’s contribution to the business to provide funds to undertake activities. Capital is the owner’s claim against the business, e.g. a capital of ₹ 5,00,000 received in cash by the business from the proprietor has dual aspects viz. business has cash i.e. asset of ₹ 5,00,000 and the proprietor has a claim of ₹ 5,00,000 against the business entity called capital.

ii. This statement is False.

Bank overdraft is a liability of the business. Businesses owe to the bank for the excess amount withdrawn from the bank account. It is a temporary loan from a bank.