What is a 'T-Account'

A T-account is 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.

BREAKING DOWN '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. Double Entry

    The fundamental concept underlying present-day bookkeeping and ...
  2. Debit

    An accounting entry that results in either an increase in assets ...
  3. Trial Balance

    A bookkeeping worksheet in which the balances of all ledgers ...
  4. Form T

    A form that FINRA requires brokers to use for reporting equity ...
  5. General Ledger

    A company's main accounting records. A general ledger is a complete ...
  6. Debit Ticket

    An accounting entry recorded as a debit that acknowledges money ...
Related Articles
  1. Investing

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
  2. Investing

    Explaining Double Entry Accounting

    Double entry is an accounting and bookkeeping term describing the method of entering transactions into the accounting records.
  3. Investing

    Financial History: The Evolution Of Accounting

    Follow accounting from its roots in ancient times to the profession we now depend on.
  4. Personal Finance

    Career Advice: Accounting Vs. Bookkeeping

    Learn the nuances that separate the similar careers of accounting and bookkeeping, and identify which is better for you based on your skills and career goals.
  5. Personal Finance

    Do I Need A Personal Accountant?

    You know you need to keep your personal finances better organized. Should you hire professional help, and if so what kind?
  6. Trading

    Understanding Regulation T

    Regulation T governs customer cash accounts and the amount of credit that brokerage firms and dealers may extend to customers to buy securities.
  7. Investing

    6 Low Fee T. Rowe Price Mutual Funds

    Learn about T. Rowe Price's family of mutual funds and discover which funds in the company's lineup charge the least fees to shareholders.
  8. Financial Advisor

    T. Rowe Price: Investment Manager Highlight (TROW)

    Learn about T. Rowe Price and its investment process, investment management teams, star managers, and financial services and products offered.
RELATED FAQS
  1. How do you calculate credits and debits in the general ledger?

    Know the key points when balancing a ledger and why it's essential to understand the relationship between credits and debits ... Read Answer >>
  2. Why do accountants use debits and credits instead of simple pluses and minuses? Why ...

    Debits and credits, and the technique of double-entry accounting, are credited (no pun intended) to a Franciscan monk by ... Read Answer >>
  3. Given a good bookkeeping system, would financial accounting be necessary?

    Bookkeeping and financial accounting may seem like they are new creations, but variations have been around for millennia. ... Read Answer >>
  4. How is a Limited Liability Company (LLC) taxed?

    Learn how to create grouping schedule codes and subcodes, how this process requires basic bookkeeping skills and why accurate ... Read Answer >>
  5. What are some examples of debit notes in business-to-business transactions?

    Review some examples of debit notes in business-to-business transactions and learn why debit notes would be used instead ... Read Answer >>
  6. What happens when my bank account is debited?

    Understand the process that takes place when your account is debited. A debit to your account happens when you use funds ... Read Answer >>
Hot Definitions
  1. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  2. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  3. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  4. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  5. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  6. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
Trading Center