WHAT IS THE ACCOUNT ?

The transaction that take place in a business enterprise during a specific period may effect increases and decreases in assets, liabilities, capital, revenues and expences items. To make upto date information available when needed and to be able to prepare timely periodic financial statements. It is necessary to maintain be seperate record for each item. They type of records devoted exclusively to record increases and decreases in cash, another one to records increases and decreases in supplies, a third one on Machioanry, etc. They type of record that is traditionally used for this purpose is called as account. Thus an account is a statement wherein information relating to an item or a group of similar items are accumlated. The simplest form of an account has three parts.

• A title which gives the name of the item recorded in the account.
• A space for recording increases in the amount of the item.
• A space for recording decreases in the amount as a "T" account because of its similarly to the letter "T" as illustrated below:

LEFT SIDE RIGHT SIDE
( Debit Side ) ( Credit Side )