TYPES OF ACCOUNTS

TYPES OF ACCOUNTS

1.      Personal Accounts: Accounts recording transactions with a person or group of persons are known as personal accounts. These accounts are necessary, in particular, to record credit transactions. Personal accounts are of the following types:

(a)     Natural Personal Account: An account recording transactions with an individualhuman being is termed as a natural persons’ personal account. eg. Kamal’s account, Mala’s account, Sharma’s accounts. Both males and females are included in it

(b)    Artificial or Legal Personal Account: An account recording financial transactionswith an artificial person created by law or otherwise is termed as an artificial person, personal account, e.g. Firms’ accounts, limited companies’ accounts, educational institutions’ accounts, Co-operative society account.

(c) Groups/Representative personal Accounts: An account indirectlyrepresenting a person or persons is known as representative personal account. When accounts are of a similar nature and their number is large, it is better to group them under one head and open representative personal accounts. e.g., prepaid insurance, outstanding salaries, rent, wages etc.

When a person starts a business, he is known as proprietor. This proprietor is represented by capital account for that entire he invests in business and by drawings accounts for all that which he withdraws from business. So, capital accounts and drawings account are also personal accounts.

2.       Real Accounts:

Accounts relating to properties or assets are known as ‘Real Accounts’, A separate account is maintained for each asset e.g., Cash Machinery, Building, etc., Real accounts can be further classified into tangible and intangible.

(a)   Tangible Real Accounts: These accounts represent assets and propertieswhich can be seen, touched, felt, measured, purchased and sold. e.g. Machinery account Cash account, Furniture account, stock account etc.

(b)  Intangible Real Accounts: These accounts represent assets and propertieswhich cannot be seen, touched or felt but they can be measured in terms of money. e.g., Goodwill accounts, patents account, Trademarks account, Copyrights account, etc.

3.      Nominal Accounts:

Accounts relating to income, revenue, gain expenses and losses are termed as nominal accounts. These accounts are also known as fictitious accounts as they do not represent any tangible asset. A separate account is maintained for each head orexpense or loss and gain or income. Wages account, Rent account Commission account, Interest received account are some examples of nominal account

GOLDEN RULES OF ACCOUNTING

NATURE OF A/C	DEBIT RULES	CREDIT RULES
PERSONAL A/C	THE RECEIVER	THE GIVER
REAL A/C	WHAT COMES IN	WHAT GOES OUT
NOMINAL A/C	ALL EXPENSES / LOSS	ALL INCOME / GAINS