Cashflows – T Accounts

I will give you a way in which I do it
All I know is that Assets have a debit balance and so do expenses, the opposite is for income and liabilities, Dr is on the left side of the T account and Cr is on the Right,
Suppose your making an Asset a/c, now upward revaluation has occured, how will you account for it in the T account is simple, just add it on the Dr side, because you are increasing the value of the asset, so you have to debit it again to make it higher, and if depreciation is also there then, Cr depreciation because you are reducing the asset.
Increases go on the side on which the Opening Balance lies( incase of liabilities, Cr side, in case of Expenses, Dr side) and it’s the opposite for reductions, the go where the closing balance lies.

Another situation if you put an Opening Balance for an asset on the Dr. side say 1m and the closing balance on the credit side is say 1.5m, this .5m will be what ?
In most cases these will be purchases of that asset(unless specified otherwise as there was an upward revaluation during the year)

Hope I helped I really put some effort into this, and really want people to use T accounts more often as they simplify accounting. It is by far the best way to understand anything, just remember that Assets have a debit balance and so do expenses, the opposite is for income and liabilities, Dr is on the left side of the T account and Cr is on the Right

Expenses and Incomes get taken to the Income statement each year. Assets and Liabilities get taken to the balance sheet and are the opening figures for next year’s transactions postings.

In a q2 situation, if the figure is on the debit side of the column of figures he normally gives, that’s an asset or an expense ( a credit side figure is either a liability, an income or equity )

A debit balance can therefore only be one of two things – an asset or an expense. A credit balance can only be one of two things – a liability or an income ( forget drawings and equity for the moment )

A debit entry into an account can only be one of three things – increase in the value of an asset, decrease in the value of a liability or recording an item of expense. A credit entry can only be one of three things – decrease in the value of an asset, increase in the value of a liability or recording an item of income.

balancing the T accounts? Add up the bigger side. Put the total in the total line and double underline it. Put the same figure in the total line on “the other side”. Now add up this other side and put in the figure ( above the total ) which will make this other side add up to the total.

Write against that new figure c/d or c/f.

If this c/d figure were on the debit side, we now need to carry it forward to below the double lines on the credit side. Now it’s below these double lines, on the credit side, ask is it a income or is it a liability. If it’s income it closes off to the Inc Statement.

If it’s a liability it goes onto the Statement of Financial Position

Hope all that helps!