Question

A company's T-accounts are all increased by debits and decreased by credits. Record debits on the right side or the left side of the T-account, depending on if the T-account represents an asset or a liability?

1) Are all increased by debits and decreased by credits.
2) Record debits on the right side or the left side of the T-account, depending on if the T-account represents an asset or a liability.

Answer 1

A company's T-accounts are used to record financial transactions and separate assets from liabilities. In a T-account, assets are represented on the left side, while liabilities are represented on the right side. Debits are recorded on the left side of the T-account for assets, while credits are recorded on the right side for liabilities.

Step-by-step explanation:

A company's T-accounts are used to record financial transactions and separate assets from liabilities. In a T-account, assets are represented on the left side, while liabilities are represented on the right side.

Debits are recorded on the left side of the T-account for assets, while credits are recorded on the right side for liabilities. This means that increases in assets are recorded as debits, and decreases in assets are recorded as credits. On the other hand, increases in liabilities are recorded as credits, and decreases in liabilities are recorded as debits.

For example, let's say a company receives cash from a customer. The cash is an asset, so it would be recorded on the left side of the T-account as a debit. If the company borrows money from a bank, it would be a liability, so it would be recorded on the right side of the T-account as a credit.