Accounting Basics: The Account

The Account

• Within commercial activity, various values are managed for different reasons.
• Account records values, sorts them by concepts, groups them under a single name.
• All of this is in order to orderly manage increases and decreases.
• An accounts can be represented graphically through a T-chart
• The T-chart represents structure of the general ledger
• Increases are recorded on one side and decreases recorded on the other.

Parts of the Account

• Title, or account name is under which operations of a single concept are grouped.
• Debit is the left side of the T-chart, where debits, or charges of an account are recorded.
• Credit is the right side of the T-chart, where credits are recorded.
• Date refers to the date when the transaction occurred.
• Concept is the detail of the operation that is being recorded.
• Value is the amount of the transaction made.

Account Terminology

• Naming the Account is writing down the name under which a group of operations is recorded.
• Opening the Account is recording the first operation, writing down the amount where it corresponds.
• If it's an Asset or Loss account, it should be written as a debit
• If it's a Liability or Profit account, it should be written as a credit.
• Debiting the Account means writing down a value on the debit side - debiting an account.
• Crediting means writing down a value on the credit side - crediting an account.
• Balancing the Account consists of finding the difference between the sum of the debit side and the credit side.
• Balancing an account consists of equalizing the sum of the debit with that of the credit, placing the balance in the column that adds up less.
• Closing the Account is drawing two horizontal lines below the equal sums. If one of the sides has blank lines, a diagonal line is drawn.
• Reopening the Account is opening an account that was closed, writing down the previous balance on the first available line after closing.