T-Account

AAA

DEFINITION of 'T-Account'

An informal term for a set of financial records that use double-entry bookkeeping. The term T-account describes the appearance of the bookkeeping entries. If a large letter T were drawn on the page, the account title would appear just above the T, debits would be listed under the top line of the T on the left side and the credits would be listed under the top line of the T on the right side, with the middle line separating the debits from the credits.

INVESTOPEDIA EXPLAINS 'T-Account'

In double-entry bookkeeping, a widespread accounting method, all financial transactions are considered to affect at least two of a company's accounts. Because of this, the credits and debits on each side of the T account must match. If a bookstore sold $20 worth of books, it might debit its cash account $20 and credit its books or inventory account $20. This double-entry system shows that the company now has $20 more in cash and a corresponding $20 less in books.



RELATED TERMS
  1. Cash Accounting

    An accounting method where receipts are recorded during the period ...
  2. Zero-Proof Bookkeeping

    A manual bookkeeping procedure in which posted entries are systematically ...
  3. Double Entry

    The fundamental concept underlying present-day bookkeeping and ...
  4. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  5. Trial Balance

    A bookkeeping worksheet in which the balances of all ledgers ...
  6. Journal

    1. In accounting, a first recording of financial transactions ...
Related Articles
  1. Material Adverse Effect A Warning Sign ...
    Markets

    Material Adverse Effect A Warning Sign ...

  2. Footnotes: Early Warning Signs For Investors
    Retirement

    Footnotes: Early Warning Signs For Investors

  3. An Introduction To Depreciation
    Active Trading

    An Introduction To Depreciation

  4. 10 Sources Of Nontaxable Income
    Taxes

    10 Sources Of Nontaxable Income

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center