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    Question

    The accounting equation is the foundation

    of:
    A Single-entry system Correct Answer Incorrect Answer
    B Double-entry system Correct Answer Incorrect Answer
    C Cash accounting system Correct Answer Incorrect Answer
    D Inflation accounting system Correct Answer Incorrect Answer
    E Management accounting system Correct Answer Incorrect Answer

    Solution

    The accounting equation, Assets = Liabilities + Equity, is the fundamental concept that underpins the double-entry system. Every transaction recorded in this system must keep this equation in balance, which is achieved by making a debit entry in one account and an equal credit entry in another.

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