Which option correctly identifies the accounting method described as recording each transaction in two accounts?

• A. Compound-Entry Accounting
• B. Single-Entry Accounting
• C. Accrual Accounting
• D. Double-Entry Accounting

Answer: (D)

Recording each transaction in two accounts is double-entry accounting. In this system every business event affects at least two accounts, with debits and credits that must balance so the accounting equation—assets equal liabilities plus owners’ equity—remains intact. This dual-entry approach captures the full impact of a transaction and provides an internal check against mistakes. For example, when cash is received for revenue, cash is debited and revenue is credited; when paying an expense, you debit the expense and credit cash. The other terms don’t describe this two-account, balanced-entry process: single-entry records only one side of a transaction; accrual accounting concerns when revenues and expenses are recognized rather than how many accounts a transaction touches; and “compound-entry” is not the standard term used for the dual-entry method.