A T-account is a graphical representation of a ledger account that looks like a “T”. The left side of the “T” is used for debit entries and the right side is used for credit entries.
The format of a T-account is:
Title
Debits
Credits
| Account Title | |
| Debit Entries | Credit Entries |
For example, let’s say we want to track the balance in our checking account. We would start by drawing a T-account and labeling it “Checking Account”. Then, we would enter all of our transactions into the account. Every time we wrote a check or made a debit card purchase, we would enter the amount on the left side of the “T”. Every time we deposited money into the account, we would enter the amount on the right side of the “T”.
At the end of the month, we would add up all of the debits and credits and the account balance would be the difference between the two. If the sum of the debits is greater than the sum of the credits, then the account has a debit balance. If the sum of the credits is greater than the sum of the debits, then the account has a credit balance.
The T-account is a very useful tool for visualizing and understanding ledger accounts. It is often used in accounting and bookkeeping courses to help students understand how ledger accounts work.