Home NEWS and INFO TOPIC 3: CLASSIFICATION OF ACCOUNTS | B/KEEPING FORM 1

TOPIC 3: CLASSIFICATION OF ACCOUNTS | B/KEEPING FORM 1

805
24
SHARE
Classification of Accounts
It is necessary to know the classification of accounts and their treatment in double entry system of accounts. Broadly, the accounts are classified into three categories:
  • Personal accounts
  • Impersonal
  • Real accounts
  • Tangible accounts
  • Intangible accounts
Let us go through them each of them one by one.
Difference between Personal and Impersonal Account
Differentiate between personal and impersonal accounts
Personal Accounts
Personal accounts may be further classified into three categories:
Natural Personal Account
An account related to any individual like David, George, Ram, or Shyam is called as a Natural Personal Account.
Artificial Personal Account
An
account related to any artificial person like M/s ABC Ltd, M/s General
Trading, M/s Reliance Industries, etc., is called as an Artificial Personal Account.
Representative Personal Account
Representative
personal account represents a group of account. If there are a number
of accounts of similar nature, it is better to group them like salary
payable account, rent payable account, insurance prepaid account,
interest receivable account, capital account and drawing account, etc.
Example of personal account
Possessions of the Business
Identify the possessions of the business
Real Accounts
Every
Business has some assets and every asset has an account. Thus, asset
account is called a real account. There are two type of assets:
  • Tangible assets are touchable assets such as plant, machinery, furniture, stock, cash, etc
  • Intangible assets are non-touchable assets such as goodwill, patent, copyrights, etc.
Accounting treatment for both type of assets is same.
Nominal Accounts
Since
this account does not represent any tangible asset, it is called
nominal or fictitious account. All kinds of expense account, loss
account, gain account or income accounts come under the category of
nominal account. For example, rent account, salary account, electricity
expenses account, interest income account, etc.
Impersonal account. any account other than a personal account, being classified as either a real account, in which property is recorded, or a nominal account, in which income, expenses and capital are recorded.
A creditor is an entity or person that lends money or extends credit to another party.
A debtor is an entity or person that owes money to another party. Thus, there is a creditor and a debtor in every lending arrangement. The relationship between a debtor and a creditor is crucial to the extension of credit between parties and the related transfer of assets and settlement of liabilities.

TOPIC 8: BALANCE SHEET (CLASSIFIED) | B/KEEPING FORM 3

24 COMMENTS

  1. I blog often and I seriously appreciate your content.
    This article has truly peaked my interest. I’m going to book mark your website and keep checking for new information about once a week.
    I subscribed to your Feed too.

  2. I’m amazed, I have to admit. Seldom do I come across a blog that’s both educative and engaging,
    and let me tell you, you have hit the nail on the head.
    The problem is an issue that too few people are speaking intelligently about.

    I am very happy that I found this during my search for something
    relating to this.

  3. Hello there! Do you know if they make any plugins to protect against hackers?
    I’m kinda paranoid about losing everything I’ve worked hard on.
    Any recommendations?

  4. Awesome website you have here but I was wanting to know if you
    knew of any community forums that cover the same topics discussed in this article?
    I’d really like to be a part of community where I can get suggestions
    from other experienced people that share the same interest.
    If you have any suggestions, please let me know. Cheers!

  5. Hi there! I could have sworn I’ve been to this website before but after reading through some of the post I realized it’s new to me.
    Anyways, I’m definitely delighted I found it and I’ll be book-marking and checking back frequently!

  6. I’m not that much of a online reader to be honest but
    your sites really nice, keep it up! I’ll go ahead and bookmark your site to come back down the road.
    Many thanks

  7. Very nice post. I just stumbled upon your blog and wanted to say that I have truly enjoyed browsing your
    weblog posts. After all I will be subscribing on your
    rss feed and I am hoping you write again very soon!

  8. I will right away grab your rss as I can not in finding your email subscription hyperlink or newsletter service.
    Do you have any? Kindly permit me recognize so that I may subscribe.
    Thanks. games ps4 185413490784 games ps4

  9. Thanks , I’ve recently been looking for information about
    this subject for a while and yours is the best I’ve
    discovered till now. However, what in regards to the bottom line?
    Are you positive in regards to the source?

  10. Attractive section of content. I just stumbled upon your weblog and in accession capital to assert that I get in fact enjoyed account
    your blog posts. Any way I will be subscribing to your augment and
    even I achievement you access consistently quickly.

  11. Awesome things here. I am very glad to see your
    post. Thanks a lot and I am having a look forward to contact you.

    Will you kindly drop me a e-mail?

  12. Heya i’m for the first time here. I came across this board and I
    find It truly useful & it helped me out much. I hope to give something back and help others like
    you helped me.

  13. I am really inspired with your writing abilities as smartly
    as with the layout on your weblog. Is that this a paid subject matter or
    did you customize it yourself? Anyway keep up
    the excellent quality writing, it’s rare to see a nice blog like
    this one these days..

  14. Can I just say what a relief to find somebody who actually knows what they are discussing on the web.
    You actually realize how to bring a problem to light
    and make it important. A lot more people really need to look at this and understand this side of your story.
    I can’t believe you’re not more popular since you
    certainly possess the gift. 0mniartist asmr

  15. Hi! Do you use Twitter? I’d like to follow you if that would be okay.
    I’m definitely enjoying your blog and look forward to new updates.

    0mniartist asmr

LEAVE A REPLY

Please enter your comment!
Please enter your name here