accounting question?

Question

this is for anyone who has taken accounting classes in school--can someone explain to me the rules for t-accounts. what i really need to know about is if an expense is paid for by cash, is the expense debited or credited? Also how do you total the t-accounts so that you can prepare a unadjusted trial balance statement?

Answer 1

Debits go on the left side of the T and credits go on the right side of the T. If you paid for an expense, say, stationery, in cash, your entries would be:
Dr Stationery a/c
Cr Cash a/c

An Expense is always debited unless it's a refund in which it is credited.

In totalling T-accounts, you total the debits and minus the credits. Assume you paid for stationery on 2 occasions, once for $100 and once for $120, and the vendor realises he's overcharged you by $20 and gives you a refund of $20. Your entries would be :
Dr Stationery $100
Cr Cash $100

Dr Stationery $120
Cr Cash $120

Dr Cash $20
Cr Stationery $20

In your stationery a/c, you'd total up your debits and get $220 and minus your credit of $20, thereby giving you a net debit balance of $200. This $200 would go into your trial balance on the debit side under Stationery.

Answer 2

When expenses are paid, the entry will be a debit to the expense account, with a corresponding credit to cash. For example:

Advertising expense $500 (Debit)
Cash $500 (Credit)

As you go through the accounting period, you will continue to debit each expense account (debits on the right side of the T-Account) as the balance increases (credits if it were to decrease). When you prepare your unadjusted trial balance, you will simply have a list of all your accounts on the left side, and then two columns next to it: Debits and Credits. Put in the balance of each account in the correct column, and when you're done, the sum of each column should be the same (hence the name, trial balance).

So the key to having a trial balance that balances is to debit and credit the correct accounts during your journal entries.

I hope that makes sense.