Question

5 what are
the types of accounts
according to modern cupproach of
o
accounting Explain the rules af
and credit for each type
also given tus examples of all
type of account,
brob
ns​

Answer 1

Types of accounts

To understand the Golden Rules of Accounting we must first understand the types of accounts. The account classification applies to all the types of general ledgers. In other words, every account will fall in one of the broad classifications given below.

There are three types of accounts:

Real Account

Personal Account

Nominal Account

A Real Account is a general ledger account relating to Assets and Liabilities other than people accounts. These are accounts that don't close at year-end and are carried forward. An example of a Real Account is a Bank Account.

A Personal account is a General ledger account connected to all persons like individuals, firms and associations. An example of a Personal Account is a Creditor Account.

A Nominal account is a General ledger account pertaining to all income, expenses, losses and gains. An example of a Nominal Account is an Interest Account.

Golden rules of accounting

Looking at the nature of all the accounts, the accounting rules have been devised. For each account there is a set of Golden Rules and hence there are three Golden Rules of Accounting. The Golden rules define the treatment of all transactions conducted by the business.

Golden Rules of Accounting

Illustration

An entity named Orange Ltd. has the following transactions.

It deposits Rs.10,000 into Bank

It buys goods worth Rs.50,000 from Apple Ltd.

It sells goods worth Rs.35,000 to Melon Ltd.

It pays Rs.12,000 as Rent for its premises

It earns Rs.3,000 as interest on a bank account.

First of all, let us identify the accounts involved in these transactions and classify them into the different types of accounts:

Transaction

Accounts involved

Type of Accounts

Deposit Rs.10,000 in Bank

Bank Account

Cash Account

Real Account - Asset account

Real Account - Asset account

Purchase goods worth Rs.50,000 from Apple Ltd.

Purchase Account

Apple Ltd. Account

Nominal Account - Expense account

Personal Account - Creditors account

Sale of goods worth Rs. 35,000 to Melon Ltd.

Sales Account

Melon Ltd. Account

Nominal Account -Income Account

Personal Account - Debtors Account

Pays Rs.12,000 as rent

Rent Account

Bank Account

Nominal Account

Real Account - Asset account

Earn Rs.3,000 as interest on Bank account

Interest received

Bank Account

Nominal Account - Income Account

Real Account - Asset Account

Now applying the golden rules to each of the transactions we will get the following journal entries :

Answer 2

Answer:

Types of Accounts

3 Different types of accounts in accounting are Real, Personal and Nominal Account. Real account is then classified in two subcategories – Intangible real account, Tangible real account. Also, three different sub-types of Personal account are Natural, Representative and Artificial. In this article, we will see the 3 golden rules of accounting with examples. Let’s begin.

Types of Accounts – Real, Personal and Nominal Account

Accounting is a process of recording, classifying and summarizing financial transactions in a significant manner and interpreting results thereof. Accounting is both science and art.

For every type of entity, whether it is large in size or small in size, it is very important to have a proper system of accounting for proper management of an entity’s business operations. An accountant must have a good understanding of the terms used in accounting and types of accounts.

An account is the systematic presentation of all the transactions related to a particular head. An account shows the summarized records of transactions related to a concerned person or thing.

For Example: when the entity deals with various suppliers and customers, each of the suppliers and customers will be a separate account.

An account may be related to things which can be tangible as well as intangible. For example – land, building, furniture, etc. are things.

An account is expressed in a statement form. It has two sides. The left-hand side of an account is called a Debit side whereas right-hand side is called as Credit side. The debit is denoted as ‘Dr’ and credit is denoted as ‘Cr’.

Classification of Accounts in Accounting

Personal Account

Real Account

Tangible Real Account

Intangible Real Account

Nominal Account

Personal Account

These accounts types are related to persons. These persons may be natural persons like Raj’s account, Rajesh’s account, Ramesh’s account, Suresh’s account, etc.

These persons can also be artificial persons like partnership firms, companies, bodies corporate, an association of persons, etc.

For example – Rajesh and Suresh trading Co., Charitable trusts, XYZ Bank Ltd, C company Ltd, etc.

There can be personal representative accounts as well.

For example – In the case of Salary, when it is payable to employees, it is known how much amount is payable to each of the employee. But collectively it is called as ‘Salary payable A/c’.

Rule for this Account

Debit the receiver.

Credit the Giver.

For Example – Goods sold to Suresh. In this transaction, Suresh is a personal account as being a natural person. His account will be debited in the entry as the receiver.

Learn more about Accounting here in detail

Real Accounts

These account types are related to assets or properties. They are further classified as Tangible real account and Intangible real accounts.