| Exploring accounting basic it is important to | | | | T-account is widely used. This account has T |
| understand that all the accounting data has to be | | | | form with two sides, left side and right side. On |
| recorded and classified properly in order to | | | | the left side we record debits, on the right side - |
| become a basis for the preparation of financial | | | | credits. Difference between debits and credits |
| statements, which need to be clear, correct and | | | | represents balance of T-account. |
| reliable. So the first step towards proper financial | | | | Whether while recording debit or credit into the |
| reporting is adequate recording of the accounting | | | | T-account, such record means increase or |
| information related to the business. For this | | | | decrease in the balance of that particular account |
| purpose such data is usually is grouped into | | | | depends on the category of data: |
| accounts, each of them having its own name and | | | | Debit on the accounts which belong to the |
| purpose. T-account is a certain form of the | | | | category of assets and expenses means increase |
| account, which will be explore in more details in | | | | in the balance of such accounts. Credit in this |
| this article. | | | | accounts means decrease. |
| The Essence | | | | Credit on the accounts which belong to the |
| So we know that all the accounting data has to | | | | category of equity, liabilities and revenues means |
| be grouped in certain categories and each of such | | | | increase in the balance of such accounts. Debits in |
| category has its own account. Since the basis of | | | | these accounts means decrease. |
| accounting is double entry principle, where each | | | | T-account example |
| transaction is recorded in the debit of one account | | | | Further explore T-account layout. |
| and in the credit of the other relevant account, | | | | |