dual aspect
prudence
money measurement
revenue recognition
Answer is Right!
Answer is Wrong!
The correct answer is: A. dual aspect.
The dual aspect concept is the idea that every economic event has two aspects: a financial effect on one side of the balance sheet and a corresponding financial effect on the other side. For example, when a company buys inventory, it increases its assets (inventory) and increases its liabilities (accounts payable).
The other options are incorrect because:
- Prudence is the concept that accountants should be conservative in their estimates and avoid overstating assets or income.
- Money measurement is the concept that only economic events that can be measured in monetary terms should be recorded in the financial statements.
- Revenue recognition is the concept that revenue should be recognized when it is earned, not when it is received.