What is a defining characteristic of double entry accounting?

The defining characteristic of double entry accounting is that for every transaction, there are two parts: a debit and a credit. This system is built on the accounting equation, which states that assets must equal liabilities plus equity. Each time a transaction occurs, it impacts at least two accounts in order to maintain this balance, effectively ensuring accuracy and completeness in financial reporting. By recording a debit in one account and a corresponding credit in another, double entry accounting helps to capture the dual impact of financial transactions and provides a built-in system of checks and balances. This structure is fundamental to generating financial statements that reflect the true financial position of a business, as it ensures that every entry is accounted for and provides a comprehensive view of transactions.