T Accounts

KindOfLearning

Ok might be a really stupid question, but I've just started a business course and we're doing accounting. We've been doing T accounts and I find them slightly confusing. In school, we only ever done balance sheets.

How do I know if something deserves its own T account, does everything have it's own account and/or are there mandatory ones i.e Bank, Capital, Revenue, Cost of Sales, Inventory, and then others which might come into the equation such as Rent, Motors, Machinery...

I'm struggling to figure out what needs it's own account and where things should go.

Probably really simple stuff but it's all easy when ya know how

Chevy RV

The easiest way to do "T" accounts is to just open a INDIVIDUAL SEPARATE account for every heading that you come across in a question as soon as you read it in the question.e.g. Sales, Purchases, Expenses like Rent.Rates, ESB, Phones etc, Stock, Bank,.........

Open as you go!


Regards,


Chevy RV

KindOfLearning

I haven't enough posts to give thanks but when I do I'll get back to you, I suppose that kind of makes sense alright.. So open an account every heading. Will try that have another question to do this evening so will attempt it without looking at the solutions

Cheers

noeleenred

The opening balance on each T account depends on the type of account it is. Assets and Expenses have debit opening balances and Liabilities and Gains have credit opening balances. Transactions work this way too, for example if I paid rent from my bank account, the double entry would be, Cr Bank (I am crediting this account as it is reducing my asset balance) and Dr Rent (Expense).
Hope this makes sense!

KindOfLearning

It does indeed, thanks Just about to start a question here now, will be back on if I don't understand something

Thank you

KindOfLearning

Finished and trial balanced. Just sometimes get confused as to which side certain things go to on the T accounts, such as cash in (left hand side) and income (right hand side) sometimes kind of throws me off, suppose i'll get the hang of it. Anyone know of any good sites with practice questions involving T accounts and then a Trial Balance? With solutions at the end preferably,

Thanks all

frankythefish

this helped me a lot anyways
http://en.wikipedia.org/wiki/Debits_and_credits

diverm2

I always find this helpful in figuring out whether something should be a debit or credit:

Left Right
Debit Credit
In Out
Asset Liability
Expense Gain

Eg. you receive cash =>money in => debit the cash a/c
but an asset => debit asset a/c

Hope it helps!

It isn't appearing correctly above, but basically separate the words on the left to the left side of t-account and the others on the right.