Three Types of Accounts in Three Types of Accounts in Accounting:Accounting:

Personal AccountsPersonal AccountsThese are the accounts which relate to These are the accounts which relate to persons, such as Customers Account, persons, such as Customers Account, Suppliers Account etc. Personal accounts Suppliers Account etc. Personal accounts include both live personal accounts (Human include both live personal accounts (Human beings) and artificial persons (Bank, beings) and artificial persons (Bank, Company etc) Company etc)

Real Accounts Real Accounts These can be tangible (i.e. can be touched and These can be tangible (i.e. can be touched and seen) or intangible (i.e. cannot be touched and seen) or intangible (i.e. cannot be touched and seen). As a result they are further divided into: seen). As a result they are further divided into:

Tangible Real Accounts. These accounts relate to Tangible Real Accounts. These accounts relate to things that can be touched, felt, measured etc. things that can be touched, felt, measured etc. such as Cash Account.such as Cash Account.

Intangible Real Accounts. These accounts relate Intangible Real Accounts. These accounts relate to things that cannot be touched but can be to things that cannot be touched but can be measured in terms of money, such as a Patents measured in terms of money, such as a Patents AccountAccount

Nominal Accounts Nominal Accounts These accounts deal with expenses and These accounts deal with expenses and losses, incomes and gains. They explain the losses, incomes and gains. They explain the nature of the transactions i.e. whether the nature of the transactions i.e. whether the particular transaction will result in an particular transaction will result in an expense/loss or in an income/gain. expense/loss or in an income/gain.

Golden Rules of AccountingGolden Rules of Accounting

Rules of Debit (Dr.) and Credit (Cr.)Rules of Debit (Dr.) and Credit (Cr.) Personal AccountPersonal Account

Debit the receiver Debit the receiver Credit the giver Credit the giver

Real AccountReal Account (Assets Account) (Assets Account)Debit what comes in Debit what comes in Credit what goes out Credit what goes out

Nominal AccountNominal Account Debit all expenses and lossesDebit all expenses and lossesCredit all incomes and gainsCredit all incomes and gains

Classify the following under personal, Real, Nominal Classify the following under personal, Real, Nominal

AccountsAccounts::

1.1. Capital Capital 8. Interest Accrued8. Interest Accrued

2.2. Bank AccountBank Account 9.Bad Debts Recov.9.Bad Debts Recov.

3.3. Purchase A/cPurchase A/c 10.Carriage Inwards10.Carriage Inwards

4.4. Drawing MadeDrawing Made 11.Prepaid Rent11.Prepaid Rent

5.5. Cash ReceivedCash Received 12. Outst. Salary12. Outst. Salary

6.6. Interest PaidInterest Paid 13.Bank Overdraft13.Bank Overdraft

7.7. Discount ReceivedDiscount Received 14. Sales A/c14. Sales A/c

IMPORTANT NOTEIMPORTANT NOTE

If there is some Prefix or If there is some Prefix or Suffix is added to a Suffix is added to a nominal account , it nominal account , it becomes a Personal becomes a Personal account. For Example:account. For Example:

Nominal A/cNominal A/c Personal A/cPersonal A/c

1.Interest 1.Interest A/cA/c

2. Rent A/c2. Rent A/c

Outstanding Outstanding intt.,Prepaid intt.,Prepaid Intt.Intt.

Prepaid Prepaid Rent, Rent Rent, Rent OutstandingOutstanding

State the nature of the account (Personal , Real, Nominal) State the nature of the account (Personal , Real, Nominal) and show which will be credited and which will be debitedand show which will be credited and which will be debited

1.1. Rent PaidRent Paid2.2. Rent ReceivedRent Received3.3. Interest ReceivedInterest Received4.4. Machinery PurchaseMachinery Purchase5.5. Building SoldBuilding Sold6.6. Goods PurchasedGoods Purchased7.7. Discount Allowed Discount Allowed 8.8. Capital IntroducedCapital Introduced