What characterizes double-entry bookkeeping?

Double-entry bookkeeping is characterized by the principle that every financial transaction impacts at least two accounts. This system is fundamentally designed to ensure that the accounting equation, which states that assets equal liabilities plus equity, remains balanced. When a transaction occurs, it is recorded in a way that reflects both the source of funds and the use of those funds, meaning that for every debit entry made in one account, an equal and opposite credit entry must be made in another.

This method not only enhances the accuracy of financial records but also provides a comprehensive view of the financial status of an organization, facilitating error detection through the balancing of accounts. For instance, if a business sells a product, it would increase (debit) cash or accounts receivable while simultaneously decreasing (credit) inventory. This dual impact reinforces accountability and transparency in financial reporting, making double-entry bookkeeping a critical practice in accounting.

The other options hint at characteristics that lack the core principle of double-entry bookkeeping. Having a single account for each transaction or affecting only one account would undermine the integrity of the accounting equation and could lead to inaccuracies in financial reporting. Furthermore, the notion that it does not require balancing of accounts is contrary to the very essence of the system, which is built on maintaining balance through double