In this lesson we are going to look at the way in which every single business transaction has two sides. In terms of accounting, many people will think of the phrase ‘balance the books’. This comes from the dual effect principle.
The dual effect principle is the foundation or basic principle of accounting. It provides the very basis for recording business transactions into the records of a business. This concept states that every transaction has a dual or double effect and should, therefore, be recorded in two places. This is the beginning of the double entry bookkeeping system
The basis of this principle is that everything that every business does has two effects.
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