Question

Before posting the transactions to the company's t-accounts, begin by determining which accounts are affected by each transaction. The transactions may affect one or two accounts?

Answer 1

A T-account is a balance sheet format used by banks and other firms to track assets and liabilities. Assets are listed on the left and liabilities on the right. Net worth is calculated as total assets minus total liabilities and is included on the liabilities side to balance the T-account.

Step-by-step explanation:

A T-account is a balance sheet format used by all firms, including banks, to track their assets and liabilities. The T-account consists of two columns, with assets listed on the left and liabilities listed on the right. In a bank's T-account, assets represent the financial instruments the bank holds, such as reserves and loans, while liabilities represent the bank's obligations, such as customer deposits. The net worth of the bank is calculated as the difference between total assets and total liabilities, and it is included on the liabilities side to balance the T account to zero. Assets must always equal liabilities plus net worth.