What side represents liabilities and equity in a T account?

In a T-account, the right side represents liabilities and equity. This is fundamental to the accounting equation, which states that Assets = Liabilities + Equity. The T-account is a visual tool that illustrates how transactions affect accounts.

When recording transactions, the left side (debit side) is used to reflect assets and expenses, while the right side (credit side) is where liabilities and equity are recorded. Thus, when a company incurs a liability or receives equity, those amounts will be recorded on the right side of the T-account. This differentiation is crucial for ensuring that the accounting equation remains balanced and helps in tracking financial transactions accurately, highlighting the importance of the dual aspect of accounting entries.

Understanding this layout is essential for any financial accounting practice, as it lays the foundation for bookkeeping and the preparation of financial statements.