The chart below provides you with additional information on common account types, as well as when you would use a debit or credit when recording your transactions.Īssets: Cash, accounts receivable, inventory, furniture, and computers are all assets Accounts payable and loans are considered liability accounts, while capital is considered an equity account. For instance, your bank account is considered an asset, while rent, payroll, office supplies, and utilities are considered expenses.Ĭredit: A credit is a transaction that increases liability and equity accounts.

Example of using a T-accountīefore you can begin to use a T-account, you have to understand some basic accounting terms.ĭebit: A debit is a transaction that increases asset and expense account balances. T-accounts also provide a tool for helping to ensure that your entries will balance. T-accounts can be particularly useful for figuring out complicated or closing entries, allowing you to visualize the impact the entries will have on your accounts.įor instance, prior to processing closing entries, you can create a revenue T-account in order to check for accuracy. No matter what type of accounting you are using, you can use a T-account as a visual aid in recording your financial transactions.

Image source: Author How are T-accounts used? T-accounts are called such because visually, they resemble a T. T-accounts can also impact balance sheet accounts such as assets as well as income statement accounts such as expenses. Like a journal entry, T-account entries always impact two accounts. The T-account, like all accounting transactions, always keeps debits on the left side of the T and credits on the right side of the T. A representation of the accounts in your general ledger, T-accounts can serve as a visual aid for bookkeepers and accounting personnel who are learning accounting processes, as well as those moving from single-entry to double-entry accounting. T-accounts are called such because they are shaped like a T. Used more as a support mechanism, accounting T-accounts can be helpful for small business owners and entry-level bookkeepers who are making the move to double-entry accounting. T-accounts are used as an aid for managing debits and credits when using double-entry accounting. T-accounts can be particularly helpful for those new to bookkeeping. T-accounts are a useful aid for processing double-entry accounting transactions.

Debit credit accounting