Account Types

Or
Kinds of Accounts

CLASSIFICATION OF
ACCOUNTS

All the accounting heads used in an organizational

accounting system are divided into MAJOR
THREE kinds.
There are mainly three type of accounts in
accounting:

PERSONAL,

NOMINAL ACCOUNTS

REAL,

AND

CLASSIFICATION OF
ACCOUNTS
ACCOUNTS
PERSONAL
ACCOUNTS

REAL
ACCOUNTS

IMPERSONAL
ACCOUNTS

NOMINAL
ACCOUNTS

PERSONAL ACCOUNTS
Accounts in the name of persons are known as
personal accounts.

Personal

Accounts

subcategories:

are

Artificial,

classified

under

Natural

three
and

Representative
Natural Personal Accounts: This type of personal accounts is
includes all gods creations who have the ability to deal with, who, in
most cases, are people. E.g. Kumars A/C, Adams A/C, etc.
Artificial Personal Accounts: Personal accounts which are created
artificially by law, such as corporate bodies and institutions, E.g. Pvt

PERSONAL ACCOUNTS
Representative Personal Accounts: Accounts which represent a
certain person or a group directly or indirectly. E.g. Lets say that
wages are paid in advance to an employee a wage prepaid account
will be opened in the books of accounts.

REAL ACCOUNTS
ALL THE ASSETS OF A FIRM, which are tangible or intangible,
fall under the category Real Accounts.
TANGIBLE REAL ACCOUNTS are related to things that can be
touched and felt physically. A few examples of tangible real accounts
are building, machinery, stock, land, etc.
INTANGIBLE REAL ACCOUNTS are related to things that cant
be touched and felt physically. A few examples of such real accounts
are goodwill, patents, trademarks, etc

NOMINAL ACCOUNTS
Accounts which are related to expenses,
losses, incomes or gains are called Nominal
accounts.

RULES FOR DEBIT AND

CREDIT
Personal
Account

Debit the Receiver

Credit the Giver
Debit what comes in

Real Accounts

Nominal
Accounts

Credit what goes

out
Debit all Expenses
and Losses
Credit all Incomes
and Gains

Steps for finding the debit and

credit aspects of a particular
transaction
Find out the two accounts involved in the
transaction.
Check whether it belongs to Personal,
Real or Nominal account.
Apply the debit and credit rules for the
two accounts.

Debit and Credit

A debit is an accounting
Definitions

entry that either

increases an asset or expense account, or

decreases a liability or equity account. It is
positioned to the left in an accounting entry.
A credit is an accounting entry that either
increases a liability or equity account, or
decreases an asset or expense account. It is
positioned to the right in an accounting entry.

Journal
Journal is the prime or original book of entry
in which all transactions are recorded in the
form of entries. Journalising is an act of
recording or entering transactions in a
Journal in the order of date.
Date

Particulars

LF

Debit
Amount

Credit
Amount

Journal Entry
Jan 1, 1981 Prakash Started a business Rs.
15,000/Date

Particulars

1981
Jan 1

Cash a/c
Dr.
To Prakashs Capital
a/c
(Being cash invetsed to
business)

LF

Debit
Amount

Credit
Amount

15,000
15,000