The Duality Concept Requires That Each Transaction Must Be Recorded

question 4

Multiple Choice

The duality concept requires that each transaction must be recorded:

• A) on both sides of the accounting equation.
• B) in both the income statement and balance sheet.
• C) in at least two different accounts.
• D) first as an expense then as equity.

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Definitions:

Fair Value

The value likely to be obtained from disposing of an asset or the expense incurred in transferring a liability, within a structured exchange involving market entities at the time of assessment.

Goodwill

An intangible asset that arises when a buyer acquires an existing business, representing the premium paid over the fair value of the identifiable assets and liabilities.

Liabilities Assumed

Obligations that a company takes on as part of a transaction, such as purchasing another company or assets.

Identifiable Assets

Assets that can be separated and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract.