to know about account from basic it is necessary to know the classification of accounting.
we can catagorized classification in two parts.
1. Personal accounting:- related to person. as; follow
A. Natural person a/c- as; Robert a/c, Julia a/c, Edward & Sons a/c
B. Artificial person a/c- as; Royal bank of scotland a/c, ITC LTD. etc
C. Representative person a/c- Outstanding expenses/Income, Prepaid Exp/Income A/c
2. Impersonal Accounts:- that not related to person. as;
Real account- related to assests as; Land & building, goodwill, patent, copyright, machinery etc.
Nominal account- Related to expenses and Income as; salary, wages, commission paid/received, interest paid /received, purchase, Bad debts, loss by fire/theft/etc.
Treatment with accounts
Dr Cr
Personal account Receiver Giver
Real account what comes in What goes out
Nominal accounts Expenses/losses income/Gains
Important note :- nominal accounts are the accounts that shown in Profit and loss account
:- any suffix or prefix with nominal accounts Become personal accounts. as; outstanding salary a/c- nominal account, prepaid salary account, outstanding rent a/c, prepaid rent etc.
we can catagorized classification in two parts.
A. Natural person a/c- as; Robert a/c, Julia a/c, Edward & Sons a/c
B. Artificial person a/c- as; Royal bank of scotland a/c, ITC LTD. etc
C. Representative person a/c- Outstanding expenses/Income, Prepaid Exp/Income A/c
2. Impersonal Accounts:- that not related to person. as;
Real account- related to assests as; Land & building, goodwill, patent, copyright, machinery etc.
Nominal account- Related to expenses and Income as; salary, wages, commission paid/received, interest paid /received, purchase, Bad debts, loss by fire/theft/etc.
Treatment with accounts
Dr Cr
Personal account Receiver Giver
Real account what comes in What goes out
Nominal accounts Expenses/losses income/Gains
Important note :- nominal accounts are the accounts that shown in Profit and loss account
:- any suffix or prefix with nominal accounts Become personal accounts. as; outstanding salary a/c- nominal account, prepaid salary account, outstanding rent a/c, prepaid rent etc.
