Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To track revenue only
B
To illustrate the dual aspect of transactions
C
To calculate tax liabilities
D
To summarize profit and loss statements
Understanding the Answer
Let's break down why this is correct
Answer
The primary purpose of a T-Account in accounting is to help organize and visualize financial transactions. It has a simple shape that resembles the letter "T," where one side shows debits and the other side shows credits. This setup makes it easier to see how money flows in and out of accounts, which is important for understanding a business's financial health. For example, if a company sells a product for cash, the cash account will increase on the debit side, while the sales revenue account will increase on the credit side. By using T-Accounts, accountants can quickly check if the total debits equal the total credits, ensuring that the accounts are balanced.
Detailed Explanation
A T-Account shows how money moves in and out. Other options are incorrect because Some might think T-Accounts only track money earned; People may confuse T-Accounts with tax calculations.
Key Concepts
T-Account structure
Topic
T-Accounts and Bank Reserves
Difficulty
easy level question
Cognitive Level
understand
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