Final answer:
The statement that every account in a balanced set of accounting records must balance is false. The balance sheet as a whole must balance, with assets equaling liabilities plus net worth, not each individual account.
Step-by-step explanation:
The statement that in a balanced set of accounting records, every account must balance is false. While it is true that the balance sheet itself must balance, it does not mean each individual account within the accounting records must be in balance by itself. Instead, what must always balance is the overall equation wherein a company's total assets equal the sum of its liabilities and owner's equity (or net worth).
The tag T-account is a visual representation of individual accounts that helps to see how transactions affect each account and ensures that the overall equation remains balanced. For a bank, the T-account will show that assets, which include reserves and loans made by the bank, must equal liabilities plus the bank's net worth. Regardless of whether the bank is healthy or bankrupt, the totals on both sides of the T-account will be the same, ensuring the balance sheet reflects a balanced financial position.
The concept that every account must balance would not allow for the representation of transactions that affect multiple accounts in different ways. For example, when a bank provides a loan, it increases both an asset account ('Loans made') and a liability account ('Deposits'). Yet, only the overall balance sheet formula is ensured to be in equilibrium.