T- Accounts Flashcards
What is an Account?
An account is a place where we can record, sort and store all transactions that affect a related group of items.
What is a T- Account?
A T- Account is a visual representation of an account.
Looks like a T
What is a General Ledger?
The general ledger is a place where a business stores a complete record of all its financial transactions and accounts.
What does a T- Account look like in its most simple form?
It looks like a T with the account name on the top. Debits go on the left-hand side so DR is labeled above the debit column and CR is labeled above the credit side on the right hand side.
Dividends expenses, and assets fall under debits on the left-hand side .
Liabilities, owners equity and revenue fall under credits on the right hand side.
If you take $40 out from the company to pay a bill, then buy some new supplies for $25, what would your cash account look like in a very simple form with a $100 opening balance? (Not T)
CASH ACCOUT
———————
Opening Balance 100
Bill Payment (40)
New Supplies (25)
——-
Closing Balance 35
How is a Balance defined?
The total at a given point in time.
How can you show the scenario of paying $40 for a bill, $25 for supplies and starting with a balance of $100 in the form of a T- Account?
Start with a T cash account. The first line will be on the debit side opening balance of $100. The second line will be on the credit side for bill payment of $40. The third line will be on the credit side for the purchase of new supplies of $25.
The final line will be the closing balance of $35.
What is Double Entry Bookkeeping?
This is the rule that every accounting entry has an opposite corresponding entry in a different account.
What does double entry accounting mean for a T account?
It means that in order to record a transaction, you need to write down both sides of it in at least two accounts.
Are T accounts a practical for every day transactions?
No, there are other ways to record your transactions.
