There are 3 Types of Accounts:-
- Real Account
- Personal Account
- Nominal Account
What is Real Account?
All assets of a firm, which are tangible or intangible, full under the category “Real Account”.
Tangible Real Account , Intangible Real Account
Rule :- Debit what comes in
Credit what goes out
What is Personal Account?
These are accounts are related to individual, firms, companies etc. A few example of personal accounts included debtors, creditors, banks, Outstanding & Prepaid Accounts.
Natural Personal, Artificial Personal Accounts
Rule :- Debit the receiver
Credit the giver
What is Nominal Account?
Accounts which are related to expense losses incomes or gains are called Nominal Accounts “Existing in name only”
Purchase Account, Sale Account, Commission Received Account
Rule :- Debit all expenses and losses
Credit All incomes & gains