Since a transaction is an exchange of values, it is composed of two
elements, both of which must be recorded in order to make a complete
financial record. In any transaction the presence of the dual amounts is
evident in the fact that on one hand a commodity, right, or service is
received and on the other hand a commodity, right, or service is given
up. Every transaction involves only the three balance sheet elements,
assets, liabilities, and proprietorship, causing increase and decrease
in three elements.
The effects of transactions on the financial records, therefore, consist only of assets changes, liability changes, and proprietorship changes or combinations thereof. Any changes in the income and expense are basically proprietorship changes whose ultimate effects are reflected in to balance sheet.
The effects of transactions on the financial records, therefore, consist only of assets changes, liability changes, and proprietorship changes or combinations thereof. Any changes in the income and expense are basically proprietorship changes whose ultimate effects are reflected in to balance sheet.
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