Meaning of T Account
A T-account is a colloquial name for a collection of financial records that employ double-entry accounting. The word refers to how the bookkeeping entries appear. First, a vast letter T is drawn on a piece of paper. The account title is then typed directly above the top horizontal line, followed by debits on the left and credits on the right, separated by the vertical line of the letter T.
HOW TO USE T ACCOUNTS
All financial transactions are considered to affect at least two of a company’s accounts in double-entry bookkeeping, a popular accounting method. One account will receive a debit entry to record each transaction, while the other will receive a credit entry.
Read More About Accrual basis
T ACCOUNT TEMPLET
AN EXAMPLE OF HOW TO USE A T-ACCOUNT:
|TYPE OF ACCOUNT||TO INCREASE BALANCE||TO DECREASE BALANCE|
|Assets: Cash, accounts receivable, inventory, furniture, and computers are all assets||Debit||Credit|
|Liabilities: Accounts payable, notes payable, and bank loans are all liabilities||Credit||Debit|
|Revenue: Money you receive from customers for goods or services provided is considered revenue||Credit||Debit|
|Expenses: Rent, payroll, office supplies, insurance, postage, and utilities are all expenses||Debit||Credit|
|Capital/Owner Equity: This represents the financial interest in the business of all owners and investors accounted for||Credit||Debit|