What is the main principle behind double-entry accounting?

The main principle behind double-entry accounting is that every transaction is recorded in at least two accounts. This system is foundational to ensuring the accuracy and integrity of financial reporting. Each transaction affects two accounts—a debit in one account and a corresponding credit in another—thus maintaining balance in the accounting equation: Assets = Liabilities + Equity.

This dual entry system helps prevent errors and fraud, as the total debits must always equal the total credits. It provides a complete view of financial activity and enables comprehensive tracking of how transactions impact the overall financial position of an entity.

In contrast, any option suggesting that transactions are recorded in just one account overlooks the fundamental aspect of duality that ensures all financial realities are accurately represented. The restriction to cash transactions fails to encompass the broader scope of accounting principles, which include credit and non-cash activities. Finally, the idea that financial records are only maintained by management misrepresents the collaborative nature of bookkeeping and accounting, which involves multiple stakeholders for accuracy and oversight.