Read Along With the VideoTranscript
Let's talk about T-accounts. T-accounts are a way to visually represent accounts, and accounts are things like cash, accounts payable, accounts receivable, basically anything that you can think of, revenue, expenses, any of your liabilities, any of that kind of stuff. So that's what we're talking about when we say accounts, is all of this good stuff right here. And what we're trying to do is represent activity. So you may have a cash account, and you may say, "Well, it increased $100, and then it decreased 50, and then we got 25 more, and then we spent 15 on something."
And so we're keeping track of all the cash in and all the cash out. So now let's look at what a T-account is. So a T-account is a way to visually represent an account, and this is what it looks like, a T. That's why we call it T-accounts. So for a T-account, you draw your T like this, then you put the title of your account at the top. And on one side, you're gonna have your increases, and on the other side, you're going to have your decreases. And we're just gonna look at cash right now and just take my word for it, that increases go on the left and decreases go on the right.
So if I lose cash or if I spend cash, it goes on this side, and if I get cash, it goes on this side. We're gonna look at how to determine these things for yourself in the debits and credits video. But for now, just take my word for it. So as we're looking at the T-account for cash, now the way that we organize this account is, so if we have all of these transactions over here, we're gonna say increases go on one side, decreases go on the other.
And so you can see you just work your way down just like that. And then at the end of the month or the period or whatever period you're accounting for, you add up 125, 65, and you're left with 60 on the positive side. So you add up all the pluses, 125. You add up all the minuses, 65. You take 125, subtract 65. You're left with a positive 60. This is the positive side. So this is your ending cash balance.
T-accounts are super simple. That's really all there is to it. Now, the thing that's going to be a little bit more difficult is right here. How do we determine the pluses and minuses, which side they go on? How did I know that the left side of the cash account is a plus and the right side of the cash account is a minus? Let's take a look at the debits and credits video to figure that out.