Tag: meaning, definition, and advantages of double entry book-keeping

On the other hand, the double entry system is based on scientific principles and is, therefore, used by most of the business houses. 

The system recognizes the fact that every transaction has two aspects and records both aspects of each and every transaction.

This question is identical to Q431719. The double entry system provides complete transaction records (A), arithmetical accuracy checks (B), and detailed profit/loss preparation (C). Since all are valid merits, 'All of the above' is correct.

Companies Act, 2013 requires every company to keep and maintain at its registered head office books of accounts and relevant documents and the financial statements for each FY (financial year) that provides a true and fair picture of the company's state of affairs which includes its branch offices and other offices.

When a salary is paid to a proprietor, it is treated as a withdrawal or an expense. The entry involves debiting the proprietor's salary/drawings account and crediting the cash account, which effectively reduces the capital account.

Adjustments at the end of the accounting period must follow the double entry principle to ensure that the financial statements remain balanced and accurate.

Real account is an record of an asset. An asset can be current asset such as cash, a fixed asset such as building and intangible asset such as goodwill. Real account relate to the assets & liabilities of a business.

The fundamental concept of the double entry system is that every transaction has two sides: a debit and a credit, which must be equal in amount.

When an owner introduces cash into the business, the business receives an asset (Cash) and the owner's equity increases (Capital). Therefore, Cash is debited and Capital is credited.

Since the Liability shows credit balance as per the accounting equation. When a liability is reduced or decreased, it is recorded on the debit side of the liability account.

Option C is correct.