Chapter 4.3 The T Account

Chapter 4.3
The T Account
Ledger T accounts have three main pieces of
The name at the top of the account
Dollar value of the total of the account
Debit or credit value of account
Pencil footings:
small pencil figures used to show subtotals of
the debit and credit sides of the T accounts
on the ledger.
Calculating Account balances of a
ledger account
To calculate the total of a ledger account find
the sum of each side of the account, use a
pencil footing to indicate the two subtotals.
Subtract the smaller subtotal from the
larger, circle the result just below the two
subtotals (this balance should be a debit if an
Asset account and a credit if a liability or OE
Exceptional Account balances
If an Asset account for some reason ends up
with a credit balance this is called an
exceptional balance. The asset account will
temporarily be a liability account….
how can this happen?
Bank vs Cash
In accounting the cash account is often
called BANK because businesses store their
cash in a bank as opposed to keeping bags
of money in a back room.
Cash and Bank are the two terms that are
used interchangeably in accounting