THE T-ACCOUNT

• Bookkeeping is the process by which a

company’s financial transactions are
recorded and organized.

• There are two basic types of

bookkeeping. Single-entry bookkeeping
and double-entry bookkeeping.
What is t-account ?
• A T-account is an informal term for a set of
financial records that use double-entry
bookkeeping.
• It is called a T-account because the
bookkeeping entries are laid out in a way
that resembles a T-shape.
• The account title appears just above the T.
• T-account is also called LEDGER account.
• Single entry bookkeeping is the simplest form
of bookkeeping where a single entry is made
for every transaction usually in a cash book.

• Double-entry bookkeeping is based on the

principle that every transaction affects a
minimum of two accounts.
• Transactions are recorded as debits and credits.

• In this system, the total credits must always equal

the total debits.
Debits and Credits

• After you have identified the two or more accounts involved in a

business transaction, you must debit at least one account and credit
at least one account.
• To debit an account means to enter an amount on the left side of the
account. To credit an account means to enter an amount on the right
side of an account.
• Debit means left
Credit means right
• Generally these types of accounts are increased with a debit:
• Dividends (Draws)
Expenses
Assets
Losses
• Generally the following types of accounts are increased with a credit:
• Gains
Income
Revenues
Liabilities
Stockholders' (Owner's) Equity
• To decrease an account you do the opposite of what was done to
increase the account. For example, an asset account is increased with
a debit. Therefore it is decreased with a credit.
• The abbreviation for debit is dr. and the abbreviation for credit is cr.