For now, let’s skip to the last, for “T” accounts are a favourite of
accountants and bookkeepers:
A “T” account separates Debits and Credits into columns with Debits on the
left-hand side, and Credits on the right-hand side. Presented this way, the values
do not have signs, unless they are, in fact, less than zero. This traditional method
of presentation can immeasurably complicate accounting operations, and even
understanding accounting principals, but it is worth knowing because it is, of
course, consistent with these principals and with the way financial statements are
presented. Graphically the method does present the fundamentals.
ASSET
____________________
LIABILITY
____________________
EQUITY
___________________
PROFIT(LOSS)
____________
While accounting is not a complexsystem it can easily become so
complicatedone becomes utterly confused and lost after only a step or two.
Knowing the basics before beginning is one’s only hope. Knowing the chargeto
assign to Debit and Credit and totting algebraically greatly simplifies the task.
