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The Uses of T Accounts in Accounting
In actual accounting practice, entries made in the general ledger books are carefully analyzed and proven before they are actually posted in the books of accounts. This is to preserve the neatness of the general ledger as they are the main reference material that summarizes all the transactions of the business for an entire accounting cycle.
In addition to that, a general ledger that contains erasures and alterations does not reflect well, not only on the image of the bookkeeper but on the business entity as well. There are cases when external users like Independent External Auditors or the IRS will want to have a look at the contents of the general ledger to trace entries for certain transactions. Chances are, these external users may have the impression that the entries are being manipulated if the books of accounts contains too many erasures or alterations. For this purpose, T accounts and templates that are ready for use serve as useful rough drafts in checking out the proposed or intended accounting entries before actual posting.
T accounts are often used when preparing adjusting and closing entries and will form part of the year-end post adjusted and post closing working papers. They are also useful during those instances when management will consult with an accountant regarding certain business decisions. These are instances when management would like to be provided with a clearer picture of how the business operation is performing in terms of profits and expenses. A concrete example of this T account use is illustrated in the article entitled Examples of T Accounts.
In case you are not that familiar with MS Excel 2007 and would like to create ready-to-use templates for T accounts, an easy to follow tutorial is provided below.
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2. Click on the “Border" icon to reveal the dropdown menu and from there choose the “Draw Border" option.
3. Simply trace the line of the worksheet on the cells selected to form the T account templates, then type the title of the T account using the formula bar. In case you need to edit, simply undo or select the “Erase Border" option.
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4. In case you want to remove the gridlines of the worksheet, choose the Page Layout selection at the top of the tool bar then look for the Gridline section. Simply uncheck the “View" box . The screen-shot image of the Page Layout shows the Gridline tab in a red frame. This option is useful if you prefer to print hard copies of your templates without the gridlines.