Account
An account is an element in an accounting system that is used to classify and summarize measurements of business activity.An account will be set up whenever it is necessary to provide useful information about a particular business item.For example,one person might name an account Notes payable and another might call it loan payable.Both account titles refer to the amount borrowed by the company.
Accounts may take on a variety of formats.some account are printed and entries are written by hand;Every account format must provides for increases and decreases in the item for which the account was established.
T-Account
To understand how the increases and decreases in an account are recorded,textbook use the T-account;it derives its name from the fact that it looks like the letter of T.
Debits and credits
The accountant uses the term debit in lieu of saying “place an entry on the left side of the T-Account” . And credit for “place an entry on the right side of the T-Account.A debit entry is an entry on the left side on an account,while a credit entry is an entry on the right side on an account.
Double-Entry Procedure
Once a business event is recognized as a business transaction, it is analyzed to determine its increase or decrease effect on the assets,liabilities,stockholder equity,revenues,or expenses of the business.These increase or decrease effects are then translated into debits and credit.
The requirement that each transaction must be recored by an entry that has equal debits and credits is called the double-entry procedure, or duality.this double-entry procedure keeps the accounting equation in balance..
