Define double-entry bookkeeping and explain how it keeps accounts balanced.

• A. Each transaction has a debit and a credit; totals on both sides must balance, preserving the accounting equation.
• B. Only debit entries are recorded.
• C. All entries must be reversed after posting.
• D. Only credit entries are recorded.

Answer: (A)

Double-entry bookkeeping means every transaction touches at least two accounts and uses both a debit and a credit. The amounts recorded on the debit side must equal the amounts on the credit side, so total debits always match total credits. This balance keeps the accounting equation intact: assets equal liabilities plus equity, and this relationship holds true after every entry. Debits and credits have different effects depending on the account type—debits increase assets, while credits increase liabilities and equity—so recording both sides correctly shows the full impact of the transaction. For example, buying inventory with cash decreases cash (credit) and increases inventory (debit) by the same amount, keeping everything balanced. The other approaches—recording only one side, reversing entries after posting, or recording only one type—would miss part of the transaction and disrupt the balance, making errors harder to detect and the true financial position harder to see.