Video: T Accounts and Normal Balances

In this video we begin to look at the chart of accounts a little more closely and review what we covered last video, such as the diffetent types of accounts:


I also introduce T accounts, which is basically a visual representation of a particular account. Accounting is a system of debits and credits. on the T account, debits are on the left, while credits are on the right. Depending on the type of account, a debit may increase or decrease that acoount. Likewise, the same holds true for credits.

With debits, think of D.E.A.L:


Generally, dividends, expenses, assets, and losses are increased with a debit and decreased with a credit

With Credits, think of G.I.R.L.S:

-Stockholders/owner equity

Generally, gains, income, revenue, losses, and stockholders-member equity will increase with a credit and decrease with a debit

Also, consider contra accounts which operate “contrary” to their main account counterparts. Examples are “allowance for bad debts” as a contra to accounts receivable and “discounts” as a contra to income-revenue

In our next video we will use T accounts to record transactions and begin to see how they shape our financial statements.

Video: Intro to Small Business Accounting and Accounts

When we talk about small business accounting, or accounting in general, we are dealing with transactions for a business to report for compliance, as well as to measure the health of the business based on financial data.

Some users of accounting data:
-Banks-Financial institutions
-Potential buyers and sellers of businesses

Accounting – 5 different types of accounts
-Expenses – Costs

3 Main Financial Statements used for accounting purposes:

-Income statement: Income – Expenses = Profit/taxable income
-Balance sheet: Assets = Liabilities + Equity
-A picture of a business’ financial health in a moment in time
-Statement of cash flows