We will be talking about T-accounts in this accounting lecture, going here.
Accountants use many terms to establish the foundation for an accounting program. These terms include debit and credits, T-accounts, and double-entry accounting systems. These terms are well-known to accounting students all over the globe. They can still be very useful to business people, no matter if they’re investment bankers or small business owners. They are simple to understand and can help with all kinds of business situations. Let’s take a closer look at these terms.
Accounts contain accounting records that record transactions and other events. An account stores information about transactions and events. Accounts are a place where numbers can be tracked that relate to a specific item, class, or category. There are three types of accounts: Cash, Accounts Receiveable and Fixed Assets. Accounts payable, Accrued Payroll, Sales and Rent, as well as Expenses.
An account can be divided into three parts.
– Name of the account
– Left (also called debit).
– Right side, known credit
These parts of an accounting account look similar to the letter T, so they’re called T accounts. It is possible to create T accounts on one piece of paper. You can also keep your accounting records. Accounting professionals no longer need to draw T accounts on paper. They use accounting software, such as QuickBooks and Microsoft Accounting (Peachtree), JD Edwards or Oracle.
Balance, credit, and debit
Debit in account refers the left side, credit refers to right. These terms can be abbreviated Cr for credit or Dr to denote debit. Credit and debit are used to indicate which side T will be recorded.
An account balance is the sum of the credit and debit amounts. A debit can signify an increase in the account balance of some accounts while a debit could refer to a decrease. Below you will find a listing of the different types and their respective debits.