The ‘Double Entry System’ of Accounting states that every business transaction affects _______.

Correct option is A

In the Double Entry System, every business transaction has a dual effect, meaning it impacts at least two accounts—one account is debited and another is credited. This ensures that the accounting equation Assets = Liabilities + Capital always remains balanced. The principle followed is “Every debit has a corresponding credit.” Although sometimes more than two accounts can be affected (compound entries), the minimum number remains two, making option (a) the correct one.
Information Booster
· The Double Entry System was introduced by Luca Pacioli.
· It provides a scientific and complete record of all transactions.
· Helps maintain the accuracy of financial records.
· Ensures that the trial balance can be prepared to check arithmetical errors.
· Reinforces the duality concept of accounting.