Final answer:
The double-entry accounting system records every transaction in two accounts, with debits equaling credits, maintaining the balance reflected in T-accounts that separate assets from liabilities and net worth.
Step-by-step explanation:
The double-entry accounting system is a fundamental concept in accounting that ensures every financial transaction is recorded in two separate accounts, following the principle that each debit has a corresponding credit and vice versa. This practice helps in maintaining the balance sheet, which is represented in a two-column format called a T-account.
The T-account separates the assets, listed on the left, from the liabilities and net worth, listed on the right, confirming that assets will always equal liabilities plus net worth. In this way, the system provides a comprehensive and error-detecting method of recording and balancing financial transactions in the records of a firm.