Posts Tagged ‘Accounting’
July 2018 Update
Here’s what happened in July and some plans for August. In July, nearly 100 students enrolled in my new video training course 7 Ways to Improve your QuickBooks® Workflow! This is a great course if you’re new to QuickBooks® Online or want to learn some time-saving tips. Click the link below for more details. Students are…
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June 2018 Update
Just wanted to share some news about what happened in June and plans for July. At the end of June my new video training course 7 Ways to Improve your QuickBooks® Workflow was completed and published! It’s nearly an hour in length and covers seven changes/techniques to improve your workflow in QuickBooks® Online Essentials or QuickBooks® Online…
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T-Account Example
For the image below, total Debits less total Credits equal the Account Balance. So, in the example in the image, total Debits of 2,675 less total Credits of 275 equal 2,400. This is a Debit amount since, in this example, Debits are greater than Credits.
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What T-Accounts do
All Debits and Credits are tracked in an Account’s T-Account. When tracked properly, it’s easy to figure out the balance of an account.
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How T-Accounts help
Each Account has it’s own T-Account. This allows proper transaction tracking of Debits and Credits.
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Anatomy of a T-Account
A T-Account visually represents the impact transactions have on a particular account. As seen in the image, the white “T” allows space for an Account Name (at the top), Debit Side (Left), and Credit Side (Right). It’s a simple visual that helps when trying to understand the balance of an account.
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Normal Balance: Expense
The normal balance of an Expense Account is a Debit. So, if you purchased $450 worth of office supplies, it means you have a $450 Debit in the Office Supplies account.
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Normal Balance: Revenue
The normal balance of a Revenue Account is a Credit. So, if you earned $750 from selling widgets (Sales), it means you have a $750 Credit in the Sales account.
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Normal Balance: Owners’ Equity
Like Liability Accounts, the normal balance of an Owners’ Equity Account is a Credit. So, if you have $250 in Retained Earnings, it means you have a $250 Credit in the Retained Earnings account.
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Normal Balance: Liabilities
The normal balance of a Liability Account is a Credit. So, if you owed $750 to someone in the form of a Notes Payable, it means you have a $750 Credit in the Notes Payable account.
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