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Written By:
Lisa Borga

## Examples of  T-Accounts

A T-account is a graphic representation of one of the General Ledger accounts.

T-accounts show the effect of journal entries on the accounts that are involved in the transaction.

The T-account is shaped like the letter T, and the account name goes on the line forming the top of the T.

The debits go on the left side of the T, and the credits go on the right side of the T.

Below, there are some examples of T-accounts, which will show how they are used.

These examples will include some of the most used T-accounts.

T-accounts are a way to visually show the journal entries that are entered in a business’s general ledger.

A T-account gets its name from the fact that it looks like the letter T.

Debits are recorded on the left side of the T, and credits are recorded on the right side.

Unfortunately, these examples won’t show all of the different possible T-accounts because there are just too many.

## Example One

Ms. Wilson is renting space in a strip mall for her bakery business from Mr. Jones. Ms. Wilson received an invoice on October 31st for \$4,000 for October’s rent.

On November 2nd, Ms. Wilson paid the \$4,000 in rent. Mr. Jones makes the payment as well.

This example involves three accounts: the cash account, the rent expense account, and the accounts payable account.

The first transaction to record would be the initial invoice for \$4,000.

For this transaction, rent expense would be debited for \$4,000, and accounts payable would be credited for \$4,000.

This records the expense as well as the liability to pay the expense.

Once the rent is paid, accounts payable will be debited for \$4,000, which will eliminate the liability, and cash will be credited for \$4,000.

The credit to cash will lower the balance in the cash account.

## Example Two

Ms. Baker started a tailoring business in February. Ms. Baker observed the transactions below.

Review the transactions and then record them.

These are the transactions for the month of February.

Post the journal entries first.

Then, prepare the T-accounts.

 Date Transactions 02/02/2021 Ms. Baker took \$400,000 from her funds and deposited it in the business’s account. 02/01/2021 She rented office space for \$3,000 a month. The rent is due on the first of the month. 02/05/2021 Purchased furniture for \$4,000 02/9/2021 Purchased equipment for \$7,000 02/11/2021 Paid \$500 for office expenses 02/19/2021 Mrs. Baker took \$2,500 out of the business for personal expenses. 02/28/2021 Paid employee wages of \$30,000

## Conclusion

T-accounts are an account structure that shows the effect of journals entries on accounts.

These accounts are shaped like a T and are used in double-entry bookkeeping.

They show the debits on the left and the credits on the right.

T-accounts are not used on a regular basis due to the use of accounting software.

However, T-accounts are useful for understanding the effects of difficult transactions so as to avoid making any mistakes.

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1. Cerritos College "Analyzing Business Transactions Using T-accounts " Chapter 3. December 6, 2021

2. Oklahoma State University "Use Journal Entries to Record Transactions and Post to T-Accounts" Page 1 . December 6, 2021

3. Mercer County Community College "Analyzing Business Transactions Using T Accounts" Page 1 . December 6, 2021