Reference and Legal Notices > Accounting Primer > How Transactions Affect the Balance Sheet > The T-Account
The T-Account
One way to illustrate how accounts increase or decrease is to compare an account to the letter "T." Increases are recorded on one side and decreases on the other side. Since cash is an asset, and assets are on the left-hand side of the balance sheet, you record increases in cash on the left-hand side of the T-account. You record decreases on the right-hand side. This is how the cash transactions appear on the T-account:
The amount in the Cash account after the transactions have been entered is its balance. The balance is the difference between the increases and decreases, in this case $4,000 ($10,000 - $6,000). In the accounts, the dollar symbol ($) is not shown. All the amounts are dollars.