Dual concept may be stated as “for every debit, there is a credit.” Every transaction should have two sided effect to the extent of same amount. This concept has resulted in accounting equation which states that at any point of time the assets of any entity must be equal (in monetary terms) to the total of owner’s equity and outsider’s liabilities. This may be expressed in the form of equation:
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A – L = P
Where A stands for assets of the entity.
ADVERTISEMENTS:
L stands for liabilities (outsider’s claims) of the entity
P stands for proprietor’s claim (capital) on the entity.
(The form of presentation of equation A – L = P is consistent with the legal interpretation of financial position.)