Which of the following statements best describes blockchain in the context of accounting?

• A. An encrypted, distributed database shared across multiple computers or nodes that are part of a community or system.
• B. A single, central ledger controlled by one organization
• C. A technology that cannot support smart contracts
• D. A bank's internal ledger system

Answer: (A)

Blockchain in accounting is a system where a record of transactions is stored in blocks that are cryptographically linked and replicated across many computers (nodes) in a network. Each participant holds a copy, and changes are made only when the network agrees through a consensus process. This creates an immutable, tamper-evident ledger with a clear, auditable trail, which is highly valuable for reliability, traceability, and reducing fraud.

Because blockchain can run smart contracts—self-executing agreements coded to enforce rules automatically—the idea that it cannot support smart contracts isn’t accurate. Also, describing blockchain as a bank’s internal ledger suggests a centralized setup, whereas blockchain’s strength is its distributed, multi-party validation across a network.