Because every transaction has a buyer and a seller, which accounting principle ensures that each transaction is recorded in at least two accounts, maintaining the accounting equation?

• A. Managerial accounting
• B. Double-entry accounting
• C. Tax accounting
• D. Single-entry accounting

Answer: (B)

Verified step by step guidance

1. Understand the concept of double-entry accounting: Double-entry accounting is a fundamental principle in financial accounting that ensures every transaction affects at least two accounts, maintaining the balance of the accounting equation (Assets = Liabilities + Equity).
2. Recognize the importance of the accounting equation: The accounting equation is the foundation of financial accounting, and double-entry accounting ensures that this equation remains balanced after every transaction.
3. Identify the role of debits and credits: In double-entry accounting, every transaction is recorded with a debit in one account and a corresponding credit in another account. This dual effect ensures the integrity of financial records.
4. Compare double-entry accounting with single-entry accounting: Single-entry accounting records transactions in only one account, which does not maintain the accounting equation and is less reliable for financial reporting.
5. Conclude why double-entry accounting is the correct answer: Double-entry accounting is the principle that ensures each transaction is recorded in at least two accounts, maintaining the accounting equation and providing accurate financial information.