Accounting

We answer your accounting questions.

Over 500 questions have been answered on our accounting blog. Click here to suggest a question.



October 2, 2006

What is a T-account?

A T-account is a visual aid used to depict an account in a general ledger. Above the top portion of the T would be the account title. On the left-side of the base of the T would be any debit amounts; on the right-side would be the credit amounts.

The T-account can be helpful in determining the proper balance for an account or to determine the amount to be entered in order to arrive at a desired balance. I always use two (or more) T-accounts when determining how to adjust an account balance. Drawing two T-accounts reminds us that every transaction or adjustment will have to involve at least two accounts because of double-entry accounting.

A common use of T-accounts is in preparing adjusting entries (accruals and deferrals). I begin by drawing two T-accounts. Next, I note that one of the T-accounts will affect a balance sheet account. The other T-account is noted as affecting an income statement account.

As a young accountant I had to determine the effect of a new FASB standard on my employer’s financial statements. I reported on the impact on the company’s expenses in great detail. I thought I was done until the controller drew two T-accounts on a piece of paper and said, “What about the other account? You told me about the expense account, but what other account or accounts are affected. You know we have double-entry accounting!”

You might get in the habit of using two T-accounts each time you attempt to determine the proper accounting entry. It will help you see the proper amounts and the proper accounts.

See the use of T-accounts at Debits and Credits.

Related Questions



Comments

13 Responses to “What is a T-account?”

  1. Link on October 7th, 2007 11:45 am

    On the T-Account page, why don’t you show us a T-Account and how to use it visually?

  2. marthaline on December 21st, 2007 9:30 am

    On the T-Account page, why don’t you show us a T-Account and how to use it visually?

  3. ACoach on December 21st, 2007 9:22 pm

    You can view sample T-accounts in Part 2 of our explanation of Adjusting Entries.

  4. Amber on May 28th, 2008 10:44 am

    What would a T-Account with a box on the debit side mean?

  5. kid on March 2nd, 2009 7:37 pm

    wer do u put a capital that is decreasing - credit left or right and wer do u put A liability that is also decreasing but is a debit

  6. Joyce on May 28th, 2009 11:41 pm

    Greatest site I have ever visited very helpful.
    Thanks

  7. joy on May 29th, 2009 10:36 pm

    Greates site I have ever viisited very help.

    Thanks

  8. aprie on June 14th, 2009 10:29 pm

    it’s really works and help me so much. Thank you for creating this website.

    best regard,
    aprie surabaya, INA

  9. BrotherWise84 on June 23rd, 2009 9:22 am

    I’m doing T accounts now for College Accounting. Currently working on doing transactions for a balance sheet. This perspective of the T-account worked in my favor as well.

    Thanks

    FJ, Student

  10. adiba on July 27th, 2009 1:40 am

    On the T-Account page, why don’t you show us a T-Account and how to use it visually?

  11. ACoach on July 27th, 2009 7:17 am

    Great suggestion. I will add a link to the answer. You can see illustrations of T-accounts under part 2 of the Explanation of Debits and Credits.

  12. KABIR the accounting freak on August 7th, 2009 5:16 am

    the three main factors of acccounting are:
    1.asset
    2.liability
    3.capital
    When an asset increase it is debited in the asset acc.Again when an asset decrease its credited in the acc.Capital & liability are exactly opposite to Asset.So when cap or liblt increase we credit them & debit when they decrease.

  13. ali abu turab on October 27th, 2009 11:40 pm

    It is the most greatest side i have ever seen but ther is also a room for further improvements

Leave a Reply