What is an Account

In Accounting, an account is a record of all relevant business transactions in terms of money. Account consists all the statements by data wise regarding the business transactions as person, companies, representatives, asset & liabilities, income & expenditures, profit & loss . For e.g. cash account, bank account, etc.

Account is a T-Form, generally it looks like letter word “T”, and it can be called as T-account. T account is an appropriate form to analyze the accounts and it shows sides of account i.e. debit side and credit side of an account.

What is an Account

Proforma of a Ledger Account

It is a tradition design and used to post debit amount using prefix “To” with particulars and post credit amount using prefix “By” with particulars.

Proforma of an Account
  • An account consists total 8 columns
  • It divides into two parts, i.e. left side and right side.
  • The left side of an account is used to record debit transactions and it is called as “Debit Side”
  • The right side of an account is used to record credit transactions and it is called as “Credit Side”
  • The first four columns of left side are used for debit and other four columns are used for credit.
  • Every business transaction is record with debit and credit as per rules of accounting.

Column details of an Account

  1. Date: Date refers to the transaction date / document date of record.
  2. Particulars: The details in summary/description of debit/credit transaction will be updated in particular
  3. J.F: The journal folio is a page number of accounting journal from which debit/ credit are done will updated here.
  4. Amount : Amount of debit updated in debit side and credit amount will be updated in credit side.

Types of Account

Generally account is divided into three types, i.e.

  1. Real Accounts
  2. Personal Accounts
  3. Nominal Accounts

We will discuss in details in other accounting tutorial concepts how to post journal entries in to ledger accounts.