A T-account is common way to show transactions and the balance in an account. The shape is like a capital T. The account title is at the top. The left side is called a Debit and the right side is a Credit.
A temporary account is either a revenue or expense account. Temporary accounts are also called nominal accounts. Temporary accounts are only for a specific period and are closed at the end of the period.
Time value of money
The concept that money is worth more today than in the future. This is because of inflation and the opportunity to earn interest. Time value of money (TVM) is a basic concept in finance. To calculate TVM, you can use a financial calculator or Microsoft Excel. There are five variables in TVM calculations:
- N = number of periods
- I = periodic interest rate
- PV = present value
- PMT = stream of equal payments (+ or -)
- FV = future value
A trial balance is a list at the end of the period of all the account balances from the ledger. The accounts are listed in the order of the ledger. Total debits must equal total credits or there is an error.