What is a T-Account? | T account

Definition: A T-account is a tool that is used to help understand individual ledger accounts and the effects of each transaction. Basically, a T-account is ...SkiptocontentMenuHome»AccountingDictionary»WhatisaT-Account?Definition: AT-accountisatoolthatisusedtohelpunderstandindividualledgeraccountsandtheeffectsofeachtransaction.Basically,aT-accountisawaytoorganizeandsummarizetransactionsinanindividualledger.WhatDoesTAccountMean?T-accountsgettheirnamefromtheirshape.AT-accountlooksliketheletter“t.”EachT-accounthasaheadingatthetopidentifyingwhataccountitbelongsto.ThebodyofaT-accountissplitintotwocolumns.Theleftsideisthedebitcolumnandtherightsideisthecreditcolumn.EachT-accountistotaledatthebottom.TransactionsarepostedtoeachT-accountjustlikewritingajournalentry.Throughouttheyearasacompanymakessales,transactionsareenteredintoitsaccountingsystemintheformofjournalentries.TheseentriesarethenpostedtotheGeneralLedger.Thegeneralledgeristhemainledgerinacompany’saccountingsystem.Itsummarizesallthetransactionsfromeveryaccountthatwerepostedthroughouttheyear.Sincemostcompanieshavemanydifferentaccounts,theirgeneralledgerscanbeextremelylong.Evensmallcompaniescanhavegeneralledgersthataremorethan1,000pageswhenprintedout.Obviously,itwouldbeprettydifficulttosearchthrough1,000pagesinordertofindinformationaboutoneaccount.Thatiswhyeachaccounthasitsownindividualledgeraccount.Forexample,thefixedassetsaccountwouldhaveitsownledgeraccountwithonlytransactioninvolvingfixedassets.ExampleHereisanexampleoftwoT-accountspostingthepurchaseofacar.Asyoucansee,thecashaccountiscreditedforthepurchaseofthecarandthevehiclesaccountisdebited.Downloadthis accountingexample inexcel.Contents1WhatDoesTAccountMean?2ExampleSearch2,000+accountingtermsandtopics.Searchfor:HomeAccountingTopicsResourcesCareers[i][i]

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