Accounting Fundamentals Certification (AFC) 2025 – 400 Free Practice Questions to Pass the Exam

When only two asset accounts are involved in a transaction, the fundamental principle of double-entry accounting comes into play. In this framework, every financial transaction affects at least two accounts in such a way that the accounting equation (Assets = Liabilities + Equity) remains balanced.

For a transaction involving two asset accounts, one account must increase while the other account must decrease, ensuring that the total assets remain the same overall. This means that if one asset rises in value, another asset must decrease by the same amount. This balancing act is critical to maintaining the integrity of the financial statements and ensuring that they accurately reflect the company's financial position.

Thus, the scenario where both accounts remain unchanged or where only one account either increases or decreases would not be in compliance with the rules of double-entry accounting. Only by ensuring that there is both an increase and a decrease can the transaction be properly recorded and the accounts balanced.