what is a t account 
a t account is an informal term for a set of financial records that uses double entry bookkeeping the term describes the appearance of the bookkeeping entries first a large letter t is drawn on a page the title of the account is then entered just above the top horizontal line while underneath debits are listed on the left and credits are recorded on the right separated by the vertical line of the letter t a t account is also called a ledger account understanding t accountin double entry bookkeeping a widespread accounting method all financial transactions are considered to affect at least two of a company s accounts one account will get a debit entry while the second will get a credit entry to record each transaction that occurs the credits and debits are recorded in a general ledger where all account balances must match the visual appearance of the ledger journal of individual accounts resembles a t shape hence why a ledger account is also called a t account a t account is the graphical representation of a general ledger that records a business transactions it consists of the following example of t accountif barnes noble inc sold 20 000 worth of books it will debit its cash account 20 000 and credit its books or inventory account 20 000 this double entry system shows that the company now has 20 000 more in cash and a corresponding 20 000 less in inventory on its books the t account will look like this t account recordingfor different accounts debits and credits may translate to increases or decreases but the debit side must always lie to the left of the t outline and the credit entries must be recorded on the right side the major components of the balance sheet assets liabilities and shareholders equity se can be reflected in a t account after any financial transaction occurs the debit entry of an asset account translates to an increase to the account while the right side of the asset t account represents a decrease to the account this means that a business that receives cash for example will debit the asset account but will credit the account if it pays out cash the liability and shareholders equity se in a t account have entries on the left to reflect a decrease to the accounts and any credit signifies an increase to the accounts a company that issues shares worth 100 000 will have its t account show an increase in its asset account and a corresponding increase in its equity account t accounts can also be used to record changes to the income statement where accounts can be set up for revenues profits and expenses losses of a firm for the revenue accounts debit entries decrease the account while a credit record increases the account on the other hand a debit increases an expense account and a credit decreases it t account advantagest accounts are commonly used to prepare adjusting entries the matching principle in accrual accounting states that all expenses must match with revenues generated during the period the t account guides accountants on what to enter in a ledger to get an adjusting balance so that revenues equal expenses a business owner can also use t accounts to extract information such as the nature of a transaction that occurred on a particular day or the balance and movements of each account 