![]() ![]() While you may be used to thinking of credits and debits in simple terms of plus or minus (i.e., your bank account goes up if it is credited money and goes down if it's debited), the terms are not that straightforward when it comes to business accounting. How Debits and Credits Work in Accounting Having T-accounts for each category helps you create a balance sheet or summary of your finances without the stress or hassle of digging through your records and receipts. T-accounts can be created for each account your business has, from assets to inventory to owner's equity. T-accounts are used because they are a simple and easy way to represent these corresponding transactions in and between your accounts. If money moves out of a debit account, it must move into a corresponding credit account to bring those accounts back into balance. Double-entry simply means that an entry to one account will have an opposite but matching entry in another account. This balancing of credits and their corresponding debits is known as the matching principle and is a fundamental part of the double-entry bookkeeping used by accountants, bookkeepers, and business owners. The left-hand side and right-hand side must also always balance each other out. The left side is always for debits and the right side is always for credits. The name of the account is above the top line, and to either side of the middle line are the debits and credits recorded for that account. To start, T-accounts are called such because they resemble a capital T on the journal entry page. What Are T-Accounts and Why Are They Used? ![]() Let's take a deeper look at T-accounts, how to use them, and how Skynova's accounting software helps you streamline all of your business accounting. Accountants and bookkeepers often utilize T-accounts to make the double-entry accounting system of bookkeeping easier to manage - and you can, too. T-accounts help you keep a clear image of your finances by showing in a very simple and visual fashion just how your credits and debits balance out (a key part of double-entry bookkeeping). T-accounts are a quick and easy way to represent business transactions in your general ledger and journals. Keeping your financial statements and records neat and organized is a must if you want your small business to succeed. Home Learn Accounting What Are T-Accounts? ![]()
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