Final answer:
The correct answer is option b. Transactions are recorded using debits and credits in a journal, which is the initial place for recording financial transactions using the double-entry accounting system.
Step-by-step explanation:
Transactions are recorded using debits and credits in a journal. This is the initial place where financial transactions are recorded using the double-entry accounting system, a process which involves making at least two entries for every transaction to maintain the balance of the accounting equation. The journal keeps a chronological record of transactions before they are posted to the ledger accounts.
In contrast, a T-account is a visual representation of the individual accounts in the form of a "T," which can help visually organize the debits and credits for better understanding. Nonetheless, the actual recording process begins in the journal. An annual report is a comprehensive report on an organization's activities throughout the preceding year, not where transactions are recorded. A financial statement is a formal record of the financial activities of a business, individual, or other entity, and a chart of accounts is a list of all the accounts used in the general ledger, but it is not where transactions are initially recorded.