What principle states that total debits must equal total credits?

The principle that states total debits must equal total credits is foundational to the concept of double-entry bookkeeping. This system ensures that every financial transaction affects at least two accounts, maintaining the accounting equation where assets equal liabilities plus equity.

In the context of double-entry bookkeeping, when an entry is made to record a transaction, a corresponding entry of equal value must occur. For example, if a company receives cash for a sale, an increase in cash (debit) is recorded alongside an increase in revenue (credit), reflecting the dual impact of the transaction. This mechanism helps to ensure accuracy in financial reporting and provides a way to detect errors, as the accounting will not balance if debits do not equal credits.

The other choices refer to financial statements or reporting formats but do not encapsulate the fundamental accounting principle of equal debits and credits that is pivotal in double-entry bookkeeping.