Question

5. Classify the following accounts into Asset account Liability account, Capital account, Expenses/Losses account and Income /Gains account a. Building A/C b) Salary A/c c) Cash a/c d) Bank loan a/c e) Drawing A/C f) Interest Received a/c​

Answer 1

Explanation:

Building a/c - Assets a/c

salary a/c - Expenses a/c

Cash a/c - assets a/c

Bank loan a/c - liability a/c

Drawing a/c - capital a/c

Interest received- income/ gain a/c

Answer 2

ANSWER :

• (a) Building A/C ➻ Asset Account

• (b) Salary A/C ➻ Expense/Losses Account

• (c) Cash A/C ➻ Asset Account

• (d) Bank Loan A/C ➻ Liability Account

• (e) Drawing A/C ➻ Capital Account

• (f) Interest Received A/C ➻ Income/Gain Account

___________________________________________________________

MORE TO KNOW :

❒ The five types of accounts under American Approach or Modern Approach are explained below :-

• [1] Assets Account : Assets account are the accounts of assets and properties of the business entity. These include land, building, plant, machinery, patents, cash in hand, cash at bank, debtors etc.

• [2] Liabilities Account : Liabilities accounts are the accounts pertaining to the liabilities of the business entity. These include lenders, creditors, outstanding expenses, bank overdraft etc.

• [3] Capital Account : Capital is the amount with which the business is started. It is the account of the owner who invests money in the business as capital and hence owner's Capital is included in this head of account.

• [4] Revenue Accounts : Revenue accounts are the accounts of income and gains. These include sales, discount received, interest received, commission received etc.

• [5] Expense Accounts : Expenses accounts are the accounts of expenses incurred and losses suffered by the entity. These include purchases, wages paid, rent paid, depreciation charged etc.