Explanation for T Account, Credit, Debit, & Credit. Double Entry Accounting System
This lecture will cover accounting topics such as T-accounts.
Every chartered accountants is familiar with several terms that provide the foundation for any accounting system. These terms are T-account (debit and credit), double entry accounting system (debit and credit), and T-account. Accounting students from all parts of the world are familiar with these terms. They are beneficial to any business person, no matter if they are an investment banker, or a small-business owner. They are simple to comprehend and will prove useful in almost all business situations. Let’s have a closer look.
Accounts contain accounting records that record transactions and events. An account is a record of individual increases or decreases in any asset, liability or owner’s equity. Accounts are a place where numbers can be recorded that relate to a particular item or class. Some examples of accounts include Cash, Fixed Assets (fixed assets), Cash, Accounts Receivables (cash), AccruedPayroll, Sales, Rent and so forth.
An account is composed of three parts.
– The account’s title
– Left side (known by debit).
– Right side (known by credit).
This account is called a T account because the arrangement of the parts reminds one of the letter T. Drawing T accounts on paper could be used to keep your accounting records. Nowadays, accountants can use accounting software instead of drawing T accounts.
Account Balance , Credit and Debit
debit refers to the left side and credit to the right. These terms are abbreviated as Cr for credit and Dr for debit. Credit and debit are the two sides of a T that will record account numbers.
An account balance is the sum of the credit and debit amounts. Debit can be used to increase or decrease your account balance. For a complete list of accounts and the meaning of a debit to them, see below: