How Do You Calculate Current Account Balance?
Accountants post transactions to T accounts. T accounts are named as such because entries are made in a line that resembles the letter T. On top of the T is the type of account, such as “Cash” or “Accounts Receivable.” On the left side of the T are the debits and on the right side of the T are the credits. Adding all debits then adding all credits gives the total amount of debits and credits in the account. The difference between debits and credits is the current account balance. Add together all the debits on the T Account. For example, on the “Cash” T Account, there are debits of $20, $5, $25 and $10. The total amount of debits is $60. Add together all the credits on the T Account. In our example, the “Cash” T Account had credits of $20 and $5. The total amounts of credits are $25. Subtract the one side of the T Account from the other side of the T Account. The side to subtract from will depend on the accounts normal balance. Normally assets have a debit balance, liabilities have a c
