Question

how to classify personal real and nominal account?

Answer 1

Personal Accounts

Those accounts which are related to individuals, persons and firms are called personal accounts. Personal accounts can be further divided in to:

Natural Person’s Personal Accounts

Artificial Persons Accounts

Representative Personal Accounts

1. Natural Person’s Personal Accounts

These accounts are related to human beings, physically we can touch them. They can sell or buy product and we can we can also do the same in response. Such accounts are necessary to track to those amounts which are payable or receivable.

For Example:  Baltiwala Accounts, Eraj Enterprises Accounts

2. Artificial Persons Accounts

These are not living or human beings but have a separate entity as per the law. Such business can be operated by Board of Governors, Head of Departments, Principles etc.

For Example: Standard Chartered Bank, Club or Society Accounts

3. Representative Personal Accounts

When an account represents certain person(s) is called representative personal accounts. These are

i. Outstanding Expense Account

Such accounts are created when we are bound to pay expense because we have got some services from other individuals and firms. In the balance sheet the amount will be appeared on the liability side. These accounts are also known as liability accounts.

For Example: Outstanding courier charges, salaries, communication charges.

ii. Advance Expense Accounts

In this case expenses are paid in advance but in reward we have not yet get the services. Here we will create an advance payment account in the name of those persons to whom advances are paid.

For Example: Advance Mobile Charges, Advance Salary etc.

iii. Outstanding Income Account

In simple words the amount which is receivable and the services are already provided.

For Example. Eraj Enterprises provided his services to Singer Group, but Eraj Enterprises have not yet received in income against services provided. EE will open outstanding income account in the name of Singer Group, which will show accounts receivable from Singer Group.

iv. Advance income Account.

Here earnings are received before the services are provided to the party.

For Example: A lawyer received his fee in advance but he has not presented in the court for hearing.

Real Accounts

Real accounts represent the assets both tangible and intangible.

For Example: Bonds purchased property and building, cash in hand etc.

Nominal Accounts

These accounts have no existence in real life but just a name in the books of account. These are also called proprietary because they are related to business proprietor.

For Example: Salary Accounts, Discount Accounts, Rent Accounts etc.


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Answer 2

Personal Accounts

The accounts which relate to an individual, firm, company or an institution are called Personal Accounts. Account of Mohan, Account of Ram, Drawings Account, Capital Account, etc. are examples of Personal Accounts.

Real Accounts

The accounts of all those things whose value can be measured in terms of money and which are the properties of the business are termed as Real Accounts. Such as cash account, furniture account, machinery account, building account, Goodwill account, etc.

Nominal Accounts

These accounts include the accounts of all expenses and incomes. For example salaries paid, rent paid, discount allowed, bad debts, Commission received, interest received discount received, etc.