Accounts contain a record of increases and decreases, and asset, liability and owner's equity items. The accountant would represent the account graphically using a T account. Now why would this be called a T account? Of course because it looks like a T. In a T account, what we would see is the account title Above the T. And then left side entries into this account would be called a debit and the right side entry into the account would be called a credit. These terms are a bit difficult to understand, debit and credit. So what like to do sometimes is just say. A left side entry shows up on the left side of the T account And the right side entry Shows up on the right side of the T account. So we'll use debit and left side entry interchangeably, credit and right side entry interchangeably. Now for some accounts, the left side entries, or the debits, are increases. While the credits and the right side entries are decreases in the account. But for some other accounts, it's completely the other way around. Isn't that confusing? So how do you know whether the left side is an increase or decrease in the account balance? Well, here's a trick, remember our balance sheet equation. And remember that assets are on the left side of this equation and liabilities and owner's equity on the right side of this equation. I'm going to make a T account for the asset account. And of course we could put any asset account name up there at the top of that T account, cash, inventory, account receivable, equipment. I'll make a T account for liabilities. And I'll make a T account for owner's equity. Noticing that assets are on the left side of this equation can be very helpful to us in thinking about which side of the T account for an asset account would contain increases and which would contain decreases? Since assets are on the left side of the equation, we'll record any increases to an asset account on the left side of its T account. And then as a result any decreases in that account balance will be recorded on the right side of that T account. Now you might remember from a long time ago in elementary or middle school when you jump to the other side of the equation, things tend to turn around and work the opposite way. So with liabilities and owner's equity being on the right side of the equation, then let's make sure we put any increases in those accounts on the right side of those T accounts. And then as a result decreases in those account balances will show up on the left side of the T account. So in summary, an account is going to contain the increases and decreases in the balances of asset, liabilities, and owner's equity items. We'll use this T account to represent graphically the account. Increases in asset accounts go on the left side of the T account, as assets on the left side of the equation. Increases in liabilities and owner's equity go on the right side of the T account. As liabilities and owner's equity are on the right side of the equation.