Correct Option: B. Debit the receiving account and credit the giving account Detailed Explanation: The double-entry accounting system is a foundational concept in financial accounting that ensures the accounting equation (Assets = Liabilities + Equity) remains balanced. The cardinal rule of this system is that for every transaction, there are at least two entries: one debit and one credit. This means that every financial transaction affects at least two accounts. Why Option B is Correct:

1. Understanding Debits and Credits:
2. In accounting, a debit entry increases asset or expense accounts and decreases liability, revenue, or equity accounts.
3. A credit entry does the opposite: it decreases asset or expense accounts and increases liability, revenue, or equity accounts.
4. Receiving vs. Giving:
5. When we say "debit the receiving account," we refer to the account that is gaining value or receiving an asset. For example, if a company receives cash, the cash account (an asset) is debited.
6. Conversely, "credit the giving account" refers to the account that is losing value or giving away an asset. In the cash example, if the company pays for a service, the service expense account is credited.
7. Example:
8. Suppose a company sells a product for $100 cash. The cash account (asset) increases, so we debit the cash account by $100. At the same time, we credit the sales revenue account (which is a revenue account) by $100 because the company is giving away the product in exchange for cash.
9. This transaction can be summarized as:
   • Debit Cash Account: $100
   • Credit Sales Revenue Account: $100

This illustrates the principle of debiting the receiving account (cash) and crediting the giving account (sales revenue). Why the Other Options are Wrong or Weaker:

• Option A: Debit the increasing account and credit the decreasing account:
• While this statement is partially true, it is too vague and does not specifically address the relationship between the accounts involved in a transaction. It does not clarify which accounts are being referred to (receiving vs. giving), making it less precise than option B.
• Option C: Debit the asset account and credit the liability account:
• This option is misleading because it implies a specific type of transaction (involving only asset and liability accounts) rather than the general rule of debiting the receiving account and crediting the giving account. Not all transactions involve assets and liabilities; they can also involve expenses and revenues.
• Option D: Debit the revenue account and credit the expenditure account:
• This option is incorrect because it suggests that revenue accounts are debited, which is not standard practice. Revenue accounts are typically credited when they increase. This option misrepresents the nature of revenue and expenditure accounts in the context of the double-entry system.

Summary of Key Points:

• 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.
• Understanding the roles of debits and credits is crucial for accurate financial reporting.
• Always remember that debits increase assets and expenses, while credits increase liabilities, revenues, and equity.

This foundational knowledge is essential for mastering financial accounting and ensuring accurate financial statements.