Do the Alphabet ABCD... LMNOPQRST-Account

Of course, when we talk about accounting, we will never forget this topic, maybe because it’s kind a unique thing that letter T is used among the other letters of the alphabet.

A common question usually asked in a T-account – on what side will I put this amount? Debit or Credit? Left or Right?

First, we need to know the importance of T-Account.  It is a very important tool in summarizing the transactions affecting a particular account.  In most of the accounting subjects, like practical accounting 1&2 and auditing problems, this tool is very useful.  For those who will be taking the CPA Board Examinations or CAT Examinations, you have to master the T-Account.  Aside from saving time in using it, it requires only a little effort to think about how to solve problems involving computations.

Next, you have to understand the nature of the accounts.  You also have to remember that debit is on the left side of the T-Account while credit is on the right side.  Below is a T-Account which summarizes all the normal balances of the accounts (the side on which the account increases). 

Assets Liabilities Withdrawals Equity Expenses Revenue

This T-Account is very useful.  Just use AWE-LER. You read this on any manner which you like.  This just means that Assets increase in the debit side, the same with Withdrawals and Expenses.  On the other hand, the accounts which increase in credit are liabilities, equity accounts (capital), and revenue.

What about the decrease of the accounts? Well you just have to remember that AWE will decrease on the credit side and the LER will decrease on the debit side.

Lastly, since you are already familiar with the nature of the accounts, you need to sum up all the transactions on the debit and credit side and then deduct the lower from the higher amount and place the total on the higher amount.  And don’t forget to double rule your answer.