Correct Option: B. Debit the receiving account and credit the giving account Detailed Explanation: The double entry system is a fundamental concept in financial accounting that ensures the accounting equation (Assets = Liabilities + Equity) remains balanced after every transaction. The cardinal rule of this system is that for every debit entry made, there must be a corresponding credit entry of equal value. This principle helps maintain the integrity of financial records and provides a complete picture of a company's financial position. Why Option B is Correct:

1. Understanding Debits and Credits:
2. In accounting, a debit entry increases asset or expense accounts and decreases liability, equity, or revenue accounts.
3. A credit entry decreases asset or expense accounts and increases liability, equity, or revenue accounts.
4. Receiving vs. Giving Accounts:
5. When a transaction occurs, one account receives value (the receiving account), while another account gives value (the giving account).
6. According to the double entry system, the receiving account is debited (because it is gaining value), and the giving account is credited (because it is losing value).
7. Example:
8. Suppose a company sells goods worth $1,000 on credit. The accounts involved are:
   • Accounts Receivable (receiving account) increases by $1,000 (debit).
   • Sales Revenue (giving account) increases by $1,000 (credit).
9. The journal entry would be:
   • Debit Accounts Receivable $1,000
   • Credit Sales Revenue $1,000

This transaction illustrates how the receiving account (Accounts Receivable) is debited, and the giving account (Sales Revenue) is credited, adhering to the cardinal rule of the double entry system. Why the Other Options are Wrong or Weaker:

• Option A: Debit the increasing account and credit the decreasing account:
• This statement is somewhat vague and does not specifically address the relationship between receiving and giving accounts. While it is true that increasing accounts are debited and decreasing accounts are credited, it does not capture the essence of the double entry system, which focuses on the transaction's nature (receiving vs. giving).
• Option C: Debit the asset account and credit the liability account:
• This option is too specific and does not apply universally to all transactions. While it is true that debiting an asset account and crediting a liability account can occur in certain transactions (like acquiring an asset through a loan), it does not represent the general rule of the double entry system, which applies to all types of accounts.
• Option D: Debit the revenue account and credit the expenditure account:
• This option is incorrect because it misrepresents the nature of revenue and expenditure accounts. Revenue accounts are typically credited when they increase, and expenditure accounts are debited when they increase. This option does not reflect the fundamental principle of debiting the receiving account and crediting the giving account.

Revision Summary:

• The cardinal rule of the double entry system is to debit the receiving account and credit the giving account.
• Every transaction affects at least two accounts, maintaining the balance of the accounting equation.
• Debits increase asset and expense accounts, while credits increase liability, equity, and revenue accounts.
• Understanding the relationship between receiving and giving accounts is crucial for accurate financial reporting.