Question

Explain the classification of Accounts under English System.​

Answer 1

Explanation:

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Answer 2

ANSWER :

The classification of Accounts under Englosh Approach or Traditional Approach are as follows :

• [1] Personal Accounts : Accounts heads pertaining to persons, firms, companies, organizations etc. are called Personal Accounts.

For example : Ram's A/C, Gauhati Commerce College A/C etc.

• [2] Real Accounts : Accounts heads recording transactions relating to tangible things are known as Real Accounts.

For example : Machinery A/C, Cash A/C etc.

• [3] Nominal Accounts : Accounts heads recoding transactions relating to losses, expenses, incomes and gains are known as Nominal Accounts.

For example : Wages A/C, Rent A/C etc.

MORE INFORMATION :

Recording of Transactions refers to the process of entering the transactions in the books of accounts. As the transactions are recorded in the respective accounts heads, after applying the rules for debit and credit, the account heads are required to be classified.

There are two approaches for classification of accounts. These are :

• [a] Traditional Approach or English Approach

• [b] Modern Approach or American Approach

[a] Under Traditional Approach or English Approach accounts are classified into three main categories :

• [1] Personal Accounts

• [2] Real Accounts

• [3] Nominal Accounts

[b] Under Modern Approach or American Approach accounts are classified into three main categories :

• [1] Assets Accounts

• [2] Liabilities Accounts

• [3] Capital Account

• [4] Revenue Accounts

• [5] Expense Accounts