Classification of AccountsPersonal AccountsAccounts recording transactions
relating to individuals or firms or company are known as personal accounts.
Personal accounts may further be classified as :
(i) Natural person's personal
accounts: The accounts recording transactions relating to individual human
beings e.g., Anand's A/c, Remesh's A/c, Pankaj's A/c are classified as natural
person's personal accounts.
(ii) Artificial person's personal
account: The accounts recording transactions relating to limited companies.
bank, firm, institution, club. etc. e.g. Delhi Cloth Mill; Hans Raj College;
Gymkhana Club are classified as artificial persons' personal accounts.
(iii) Representative personal
accounts: The accounts recording transactions relating to the expenses and
incomes are classified as nominal accounts. But in certain cases due to the
matching concept of accounting the amount, on a particular date, is payable to
the individuals or recoverable from individuals. Such amount (i) relates to the
particular head of expenditure or income and (ii) represents persons to whom it
is payable or from whom it is recoverable. Such accounts are classified as
representative personal accounts e.g. "Wages Outstanding Account", Pre-paid
Insurance Account. etc.
Real AccountsThe accounts recording transactions
relating to tangible things (which can be touched, purchased and sold) such as
goods, cash, building. machinery etc., are classified as tangible real accounts.
Whereas the accounts recording
transactions relating to. intangible things (which do not have physical shape)
such as goodwill, patents and copy rights. trade marks etc., are classified as
intangible real accounts.
Nominal AccountsThe accounts recording transactions
relating to the losses, gains. expenses and incomes e.g., Rent, salaries, wages,
commission, interest, bad debts etc. are classified as nominal accounts. As
already discussed, wherever a nominal account represents the amount payable to
or receivable from certain persons it is known as representative personal
account.
Rules of Debit and Credit (classification based)1. Personal Accounts: Debit the
receiver, Credit the giver (supplier)
2. Real Accounts: Debit what comes
in, Credit what goes out
2. Nominal Accounts: Debit
expenses and losses, Credit incomes and gains.,
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