Discuss the role of accounts and show how debits and credits are used in the double-entry accounting system using T-accounts.

- An account is a record of increases and decreases in each of the basic elements of the financial statements.

- Each financial statement element is made up of a number of different accounts.

- All transactions are recorded into accounts.

- The final account balance, after all changes are recorded, is used in the preparation of the financial statements.

- The left side of an account is referred to as a debit. The right side of an account is referred to as a credit.

- All accounts have a normal balance, which is a positive account balance. Assets, expenses, and dividends declared have a normal debit balance. Liabilities, shareholders' equity, and revenues have a normal credit balance.

- Increases or decreases to an account are based on the normal balance of an account. Normal debit balance accounts (assets, expenses, and dividends declared) are increased with debits and decreased with credits. Normal credit balance accounts (liabilities, revenues, and shareholders' equity) are increased with credits and decreased with debits.