When a machinery is purchased for cash, the cash balance is reduced and to that extent, the amount of machinery as an asset is recorded. This is done to follow which of the following accounting principles:

Question

Quizplus · Accepted Answer

The Dual Aspect Principle in accounting states that every transaction has a dual effect on the accounting equation, affecting at least two accounts. In this case, purchasing machinery for cash decreases the cash balance (an asset) and increases the machinery account (another asset), keeping the accounting equation balanced.

When a Machinery Is Purchased for Cash, the Cash Balance