What characterizes double-entry bookkeeping?

Double-entry bookkeeping is characterized by the principle that every transaction is recorded in at least two accounts. This method ensures that the accounting equation (Assets = Liabilities + Equity) remains in balance after each transaction. For every debit entry made in one account, there is a corresponding credit entry in another account, which maintains the accuracy and integrity of financial records.

This system allows for a comprehensive view of the financial situation of a business, as it captures the dual aspects of each transaction. For example, if a company sells a product, it recognizes revenue (increase in assets) and also records the cost associated with that product (decrease in another asset or increase in liabilities). As a result, double-entry bookkeeping provides a means of detecting errors and maintaining accountability within financial reporting.

The other options do not accurately depict the characteristics of double-entry bookkeeping. Transactions do not need to be recorded in multiple currencies, nor must they balance specifically against cash on hand. Additionally, every transaction is not recorded in the same account; rather, the essence of double-entry is that it involves at least two different accounts to ensure a balanced set of books.