To take best business decision is very important. Best business decision can be taken from correct financial reports of financial accounting. Correct financial reports can be prepared through calculating the correct balance of account. Every account is a T chart. Today, we explain its steps.
1. Draw a horizontal line and in the mid of horizontal line, you have to draw a vertical line. This is t- chart. Left side will be its debit side and right side will be its credit side.
2. If there is an asset or expense, its opening balance will be in the left side or debit side. If there is a liability or income, its opening balance will be credit.
3. Write all the other entries in the left and right side of this T chart. Entries are posted on the basis of financial accounting rules. If there will be decrease the asset, it will be the credit side of asset, if there is increase in the asset, it will be in the debit side of asset account. Like this, if there is increase in the liability, it will go to the credit side of liability account and if there is decrease in the liability, it will be in the debit side of liability account.
4. Closing of T chart with calculating the closing balance. Total debit side and credit side of T chart will be equal. If there is any difference, it will be closing balance. Closing balance may be debit or credit on the basis of difference of two side of any t chart.
1. Draw a horizontal line and in the mid of horizontal line, you have to draw a vertical line. This is t- chart. Left side will be its debit side and right side will be its credit side.
2. If there is an asset or expense, its opening balance will be in the left side or debit side. If there is a liability or income, its opening balance will be credit.
3. Write all the other entries in the left and right side of this T chart. Entries are posted on the basis of financial accounting rules. If there will be decrease the asset, it will be the credit side of asset, if there is increase in the asset, it will be in the debit side of asset account. Like this, if there is increase in the liability, it will go to the credit side of liability account and if there is decrease in the liability, it will be in the debit side of liability account.
4. Closing of T chart with calculating the closing balance. Total debit side and credit side of T chart will be equal. If there is any difference, it will be closing balance. Closing balance may be debit or credit on the basis of difference of two side of any t chart.
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