Double-entry accounting is a system that records each financial transaction in two accounts: once as a debit and once as a credit. This method ensures that the accounting equation (Assets = Liabilities + Equity) always remains in balance. It is a fundamental concept in accounting that helps to maintain accuracy and provides a more complete picture of a company's financial situation, as every entry is offset by another.
The options you provided do not accurately describe double-entry accounting. The closest correct definition is: "A method that records each transaction in terms of both its source and application of funds, ensuring that the accounting equation remains balanced."