According to which of the following accounting concepts, the owner of the business is also considered a creditor to the extent of the capital? A. Money measurement concept B. Cost concept C. Dual aspect concept D. Business entity concept

The correct answer is: C. Dual aspect concept

The dual aspect concept is an accounting concept that states that every transaction has two aspects: a debit and a credit. This means that for every increase in one account, there must be a corresponding decrease in another account.

In the case of a business owner, the owner’s capital is an asset of the business. When the owner invests capital in the business, the asset account “Capital” is increased. However, the owner also becomes a creditor of the business, as the business owes the owner the amount of capital that was invested. This is recorded by increasing the liability account “Owner’s Equity”.

The other options are incorrect because:

• The money measurement concept states that only transactions that can be measured in monetary terms should be recorded in the accounting records.
• The cost concept states that assets should be recorded at their historical cost.
• The business entity concept states that a business is a separate legal entity from its owners.