A T-account is a graphical representation of a general ledger account that visually displays the debits and credits. It helps in analyzing and recording financial transactions by showing how each transaction affects the accounts involved.
5 Must Know Facts For Your Next Test
T-accounts have two sides: the left side for debits and the right side for credits.
They are used to illustrate how transactions affect individual accounts within the double-entry accounting system.
Each transaction involves at least one debit entry and one credit entry, maintaining the accounting equation balance.
T-accounts are essential for understanding how journal entries translate into changes in ledger accounts.
They help identify errors in transaction recording by making it easier to see if debits equal credits.
Review Questions
What are the two sides of a T-account used for?
How do T-accounts help in maintaining the accounting equation?
Why are T-accounts useful for identifying errors in transaction recording?
Related terms
General Ledger: A complete record of all financial transactions made by a company, containing all individual accounts.
Double-entry Accounting: An accounting system where every transaction affects at least two accounts, with debits equaling credits.
Journal Entry: A record of a financial transaction in an accounting journal that includes details such as date, amounts, and affected accounts.