How to Balance a T-Account

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    • 1). Record the debit transaction on the left side of the T-account. For asset and expense T-accounts, record increases in assets or expenses on the debit side of the account. For liability and revenue T-accounts, record decreases in liabilities or revenues on the debit side of the T-account.

    • 2). Record the offsetting credit transaction on the right side of the T-account. For asset and expense T-accounts, record the offsetting decrease in assets or expenses on the credit side of the T-account. For liability and revenue T-accounts, record the offsetting increase in liabilities or revenue on the credit of the T-account.

    • 3). Record the normal balance entry on the appropriate side of the T-account. The normal balance entry is the entry that will balance the T-account, and it is calculated by subtracting decreases from increases. For example, if an asset T-account has a debit increase of $1,500 and a credit decrease of $500, the normal balance equals $1,500 - $500 = $1,000, and it will be entered on the debit (left) side of the account. In this example, the normal balance will be entered in the general ledger as an increase to owner's equity, which fully offsets the increase in assets.

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