Question

what is personal real and nominal account

Answer 1

Accounting is fundamentally based on Debit and Credit. There are 3 golden rules in Accounting and each A/c relates to a rue.

Personal A/c : Debit the receiver ; Credit the giver - this is in connection with personal Account. Personal Accounts reflect transactions with persons - Creditor (to whom you owe money), Debtor (who owes money to you) etc.

Real A/c : Debit what comes in ; Credit what goes out- this is in connection with Assets. when you buy assets or sell assets in your business, you will apply this rule.

Nominal A/c : Debit all Expenses and losses ; Credit all Incomes and gains- This is in connection with Expenses, loss, Income and Gains. Purchases A/c, Sales A/c, Expenses like salaries, Rent etc.

Example: Mr. A gave me loan of Rs. 10,000 in cash :

Now cash is an asset- Real account rule applies: Debit what comes in - debit Cash A/c

It is Mr. A who has given me loan, so Personal Account Rule applies - credit the giver- So credit it to Mr. A’s A/c because he will be a creditor.

Cash A/c Dr 10,000

To A’s a/c 10,000

some will be combination of two Accounts while some transactions will involve same type of account. For example, withdrawal of cash from Bank involves Real Account in both cases