Classification of Accounts - QS Study
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Classification of Accounts

Generally there are two types of Accounts, Personal Accounts and Impersonal Accounts; are employed in every sector of business transactions.

Personal Accounts: The accounts which relay to persons.

Personal accounts include the following.

  • Natural Persons: Accounts which relate to individuals. For example, Mr. XYZ’s A/c, Mrs. ABC’s A/c etc.
  • Artificial persons: Accounts which relate to a group of persons or firms or institutions. For example, HMT Ltd., various Overseas Bank, Life Insurance Corporation etc.
  • Representative Persons: Accounts which represent a particular person or group of persons. For example, outstanding salary account, prepaid insurance account, etc.

The business concern might maintain business relations with all the above personal accounts, because of buying goods from them or selling goods to them or borrowing from them or lending to them. Thus they become either Debtors or Creditors.

The owner being an entity his capital account and his drawings account are also personal accounts.

Impersonal Accounts: All those accounts which are not personal accounts. This is advance divided into two types viz. Real and Nominal accounts.

  • Real Accounts: Accounts relating to properties and assets which are owned by the business apprehension. Real accounts contain tangible and intangible accounts. For example, Land, Building, Goodwill, Purchases, etc.
  • Nominal Accounts: These accounts do not have any subsistence, appearance or shape. They relate to incomes and expenses and gains and losses of a business apprehension. For example, Salary Account, Dividend Account, etc.