Answer :
Answer:
The statement "Two entries are required to keep the accounting equation balanced" is:
A: True
Explanation:
In accounting, every transaction affects at least two accounts to keep the accounting equation balanced. The accounting equation is:
[tex]\[ \text{Assets} = \text{Liabilities} + \text{Owner's Equity} \][/tex]
This principle is known as double-entry accounting. Each transaction has a dual effect on the accounting equation, ensuring that the equation remains balanced. For every debit entry made to one account, there is a corresponding credit entry to another account of an equal amount.
For example:
- If a company purchases equipment for $5,000 in cash, the entries would be:
- Debit: Equipment (Asset) $5,000
- Credit: Cash (Asset) $5,000
In this case, one asset (equipment) increases while another asset (cash) decreases by the same amount, keeping the accounting equation balanced.
Therefore, two entries (one debit and one credit) must keep the accounting equation balanced, validating the statement as true.
