(6) DUAL IMPACT OF BUSINESS TRANSACTIONS
Dual impact of business transactions Many transactions occur daily in a business. As a result of these transactions, the values of assets, liabilities, equity, income and expenses are changed. In accounting, these changes are identified as a dual impact of a transaction. As explained earlier, each transaction causes change to two items of the accounting equation. This is termed as the dual impact of a transaction. Examples :- Investing Capital Asset (cash) increases Equity increases Purchase of furniture Asset (furniture ) increases Asset (cash) decrease Payment of Salary Asset (cash) decreases Equity decreases Because of this dual impact of each transaction, the value of each transaction should be written in two places. This ...