Describe T-accounts and how they are used
T-ACCOUNTS
A T-account is a device or convention for organizing and accumulating the accounting entries of transactions that affect an individual account, such as cash, accounts receivable, bonds payable, or additional paid-in capital. As the name implies, the T-account looks like the letter T, with a horizontal line bisected by a vertical line. Conventionally, the name of the specific individual account title appears on the horizontal line. One side of the space formed by the vertical line records increases in the account, and the other side records decreases. Which side records increases and which side records decreases differs depending on whether the T-account represents an asset account or represents a liability or shareholders' equity account.
Long-standing custom follows three rules:
1 . Increases in assets appear on the left side, and decreases in assets appear on the right side of T-accounts.
2 . Increases in liabilities appear on the right side, and decreases in liabilities appear on the left side of T-accounts.
3 . Increases in shareholders' equity appear on the right side, and decreases in shareholders' equity appear on the left side of T-accounts.
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