BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Increases and decreases to a single account in the accounting system
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debits and credits to a single account in the accounting system
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changes in specific account balances over a time period
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all of the above describe how T-accounts are used by accountants
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Detailed explanation-1: -T-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.
Detailed explanation-2: -A T-account has three sections. The top is the name of the account. The left-hand side is where you enter debits whilst the right-hand side is where you enter credits.
Detailed explanation-3: -The chart of accounts organizes your finances into five major account types, called accounts: assets, liabilities, equity, revenue, and expenses.
Detailed explanation-4: -Example of a T Account In the following example of how T accounts are used, a company receives a $10, 000 invoice from its landlord for the July rent. The T account shows that there will be a debit of $10, 000 to the rent expense account, as well as a corresponding $10, 000 credit to the accounts payable account.