Dual effect principle

This refers to the underlying principle of double entry bookkeeping, that every transaction has a dual effect which should be recorded in two places in the accounts.

The dual effect principle provides the basis for recording business transactions into the records of a business. For example, the purchase of an item of inventory by cash will increase the value of inventory held by the business and reduce the amount of cash it has by the same amount.

The dual effect principle is a term normally found in financial accounting.

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