What are they?

T-Accounts

 T accounts

•are what ledger accounts might look like if they were kept on paper (as opposed to using computer software). 

•help analyze transactions, one crosses through the T account amounts with matching debits and credits.

Mysterious?

Drawn on paper, a T account is quite

literally a large T! 

What does a T Account Consist of?

• The title of the account• The left hand side to record debit

entries for the account • The right hand side to record credit

entries for the account

CASH

Debit(Left Side)

Credit(Right Side)

Example:

At the end of an accounting

period, a balance is calculated for

each T account. 

What does it mean to calculate a balance?

• Does this account have higher debits or credits?

– Total the debit entries (left side)– Total the credit entries (right side)

• What type of balance is it?– Debit balance – the total debits exceed the

total credits– Credit balance – the total credits exceed the

total debits 

Example:

CASH

$1000.00$1250.00$ 750.00

$ 800.00$1200.00

$1,000.00

This account has a debit balance as total debits of $3,000 exceed total credits of $2,000

In Summary, T accounts:• are the building blocks of accounting• can be helpful in determining the proper

balance for an account • remind us that every transaction or adjustment

will have to involve at least two accounts• allow you to visualize how the debits and

credits of a particular entry work