Which Of The Following Statements Is (Are) Correct Regarding A T-Account? (Check All That Apply.)

The correct statements of this multiple choice question (mcq) are A, B and C, as A T-Account (TA) is a simplified form of a Ledger’s Account to easily calculate the closing balance of a particular account for the current accounting period. In this way, one can easily see the debit and credit side of a t-account and the effects of Business Transactions. The debit side or left side represents that the account (a/c) (for which the t-account is preparing) is debited while credit side or right side shows that the account is credited. When a transaction is occurred, it is posted in TA of a particular account. If the a/c is debited in a transaction, then we debit it with the amount in its TA and write the opposite a/c which is the reason.

For example, if goods sold to Mr. A for cash $300, then in Sales t-account, we credit the amount with $300 and write alongwith cash account which is the reason as shown below:

                                                 Sales TA

                                                 For the Period

                                        $                                                $

 

                                                                 Cash a/c          300

 

Balance c/d                    300

                                       _____                                       ____

 

Total                               300                                            300

                                       _____                                       _____

                                       _____                                       _____

                                                 Cash TA

                                                 For the Period

                                         $                                                $

 

 Sales a/c                         300

 

                                                  Balance c/d                     300

                                       _____                                       ____

 

Total                               300                                            300

                                       _____                                       _____

                                       _____                                       _____

Here is just show you the Sales TA in which a sales transaction is recorded. As sales is credited as it is increasing, so we credit it with the amount $300 and write the reason of a cash account which is also increasing. In cash t-account, cash is debited with the amount of $300 and the reason is the sales account. The balance c/d are also shown. So, a t-account visualizes a tool to show you the effects of transactions.

The option (D) is incorrect as it is always not true that a TA will shows you the correct balances of accounts. May be there is a compensatory error due to which the balance is totaled equally but there is wrong posting or transferring of wrong accounts in TA.