balancing an account
DESCRIPTION
Balancing an Account. Some accounts are called “T” accounts because they are shaped like a capital “T”. Money received by the household (or business) is entered on the left hand side or “debit” side of the account. - PowerPoint PPT PresentationTRANSCRIPT
Money received by the household (or business) is entered on the left hand side or “debit” side of the account
Money paid by the household (or business) is entered on the right-hand side or “credit” side of the account
At the end of each week/month, the household (or business) needs to balance the account to see how much money it has left (or how much money it owes)
In the previous example, the household had earned €850 (wages and lotto win) and spent €165 (groceries and petrol)
• To balance the account we firstly need to make both sides equal
• What can we add to €165 to make it equal to €850?
• The answer (850 – 165 = 685) is called the balance
Next, total both sides up. Both sides should now be equal, as they both contain €850. Be sure to total them both on the same line and then double underline the totals in red pen
Finally, bring the balance down below the total on the larger side (in this case, the debit side). This shows how much money is left in the account at the beginning of the next week or month
Summary1. Total both sides on a sheet of paper2. Take the smaller side from the bigger side
and call the answer “balance”3. Enter the balance onto the smaller side4. Total both sides in the account, making sure
the total is on the same line on both sides and is double-underlined with a red pen
5. Bring the balance down below the total on the bigger side