Which statement best describes the duality principle in accounting?

Which statement best describes the duality principle in accounting?

• A. Every transaction has a single effect on the accounting equation.
• B. Debits must always exceed credits.
• C. Every transaction has two effects and the equation remains in balance: Assets = Liabilities + Equity; debits equal credits.
• D. Only revenue transactions require two entries.

Answer: (C)

The duality principle is double-entry bookkeeping: every business event is recorded with two effects on accounts, and the totals of debits and credits must balance. This keeps the accounting equation intact: Assets = Liabilities + Equity. So, after any transaction, the two sides of the equation stay equal because the debit entries equal the corresponding credit entries. For example, paying cash to buy equipment increases one asset (equipment) and decreases another asset (cash) by the same amount, leaving total assets unchanged, while the two sides still balance. This is why the statement describing two effects and a balanced equation with debits equaling credits is the correct description.

The duality principle is double-entry bookkeeping: every business event is recorded with two effects on accounts, and the totals of debits and credits must balance. This keeps the accounting equation intact: Assets = Liabilities + Equity. So, after any transaction, the two sides of the equation stay equal because the debit entries equal the corresponding credit entries. For example, paying cash to buy equipment increases one asset (equipment) and decreases another asset (cash) by the same amount, leaving total assets unchanged, while the two sides still balance. This is why the statement describing two effects and a balanced equation with debits equaling credits is the correct description.