A free sample from chapter 2 Accounting Fundamentals of our Property Management Accounting in QuickBooks guide. Section 2.03 What is an Account?
An account is a container to keep track of some monetary value for a business’ records. You can only do two things to an account: increase or decrease its value. Every account has two sides:
- One side (left or right, it varies) used to increase what’s in an account
- The other side lets you decrease what’s in an account
Accounts help you keep track of where money comes from and where it goes. When figuring out how to record a complicated transaction, it is often useful to draw accounts as a “T” shape (coined “T-Accounts”) with the name of the account on the top.
If the following illustration of a cash account were a checkbook (an asset account), the left side represents “deposits.” The right side represents checks written, electronic transfers, and any decrease to the account balance.
Depending on which type of account you are using, the side that corresponds to an increase or a decrease may switch!
Below is a cash account, it increases on the left. However, a liability account increases on the right. An explanation comes later; for now let’s take a dive in with some examples.
The chapter continues on for several pages… only available in the full guide.