Question

To which class each of the following Accounts belongs :

(i) Capital account

(ii) Depreciation account

(iv) Purchase account

(v) Cash account

(iii) Sales account

(vi) Prepaid insurance account​

Answer 1

ANSWER :

✪ According to Traditional Approach or English Approach of accounts classification :-

• (i) Capital account ➻ Personal Account

• (ii) Depreciation account ➻ Nominal Account

• (iii) Sales account ➻ Nominal Account

• (iv) Purchase account ➻ Nominal Account

• (v) Cash account ➻ Real Account

• (vi) Prepaid insurance account ➻ Personal Account

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✪ According to Modern Approach or American Approach of accounts classification :-

• (i) Capital account ➻ Capital Account

• (ii) Depreciation account ➻ Expense Account

• (iii) Sales account ➻ Revenue Account

• (iv) Purchase account ➻ Expense Account

• (v) Cash account ➻ Asset Account

• (vi) Prepaid insurance account ➻ Asset Account

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MORE TO KNOW :

❒ There are three types of accounts under Traditional Approach or English Approach of accounts classification. These are :-

• (I) Personal Accounts

• (II) Real Accounts

• (III) Nominal Accounts

❒ There are six types of accounts under American Approach or Modern Approach of accounts classification. These are :-

• (I) Assets Account

• (II) Liabilities Account

• (III) Capital Account

• (IV) Withdrawal Account

• (V) Revenue Account

• (VI) Expense Account