In order to record the transaction in accounting, accountant needs a storage point. T – Account serves this purpose very well. T – Account saves all the debit and credit transaction in a chronological order. This helps a lot in later records searching.
Assets, Liabilities, Equity, Income and Expenses have several T accounts within them such as:
Assets
- Property, Plant & Equipment
- Computers & Accessories
- Furniture & Fixture
- Machinery
Liabilities
- Accounts Payable
- Notes Payable
- Loan Payable
- Interest Payable
Expenses
- Utilities Expenses
- Payroll Expenses
- Electricity Expenses
T account resembles the English word T as the format is very similar to the word T. A typical T account has three elements: date, debit side and credit side.
| Title of Account | |||
| Date | Debit | Date | Credit |
However, some entities prefer to add a description column into the simple typical T account to make it more valuable.
| Title of Account | |||||
| Date | Description | Debit | Date | Description | Credit |