Double entry accounting requires that:

Question

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Double entry accounting requires that the total assets of an entity equal the total of the claims held by external parties plus those claims held by the owners. This ensures that the accounting equation (Assets = Liabilities + Equity) is always balanced. Option A and D are partially correct, but they don't encompass the whole idea of the accounting equation. Option C is incorrect because it suggests that the liabilities are greater than the assets, which would result in negative equity. Option E is incorrect because there is a correct answer among the given options.

Double Entry Accounting Requires That