Balancing accounts slideshow

Balancing an account.

T accounts

• 
• Legenda: they are called t accounts as they are in the shape of a t

Example

• Money
• received by the household (or business) is entered on the left hand side or
• “debit” side of the account
• 

Example 2

• Money
• paid by the household (or business) is entered on the right-hand side or
• “credit” side of the account
• 

Why??

• 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)

Which side is bigger?

Dr 850 CR 165

Slide 8

• •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

Dr Cr

• 850 165 + 685 =
• 850

Slide 10

• 
• To
• make both sides equal, we add the balance to the smaller side (in this case,
• the credit side)

Slide 11

• 
• 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

Slide 12

• 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
• 

SUMMARY

• 1.Total both sides on a
• sheet of paper
• 2.Take the smaller side
• from the bigger side and call the answer “balance”
• 3.Enter the balance
• onto the smaller side
• 4.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

REVIEW

• •Which
• side does money received by the household/business appear on?
• •What
• is the name used to describe the difference between both sides?
• •Which
• side does money paid by the business appear on?