Types of Accounts

1. Real Account :

• Real account represent accounts of properties and assets.
  1. Tangible real accounts :These accounts represent assets and properties which can be seen touched or measured, purchased and sold and they have a physical shape.
     • Examples : Machinery, stock, furniture and Cash etc.
  2. Intangible real accounts :These accounts represent assets and properties which can be which cannot be seen touched or felt because they have no shape.But they can be measured in terms of money.
     • Examples : Goodwill, Patents, Trademarks and Copyrights etc.
• Golden Rule :
  • Debit what comes in
  • Credit what goes out

Real account is represented as 3 types :
Assets :

• Assets or the things that a company owns and also reffered as resources of the company.
• Assets = Liabilities + Equity

Liabilities :

• Liabilities are obligations of the company, they are amounts owed to others.
• Common example of liability is accounts payble.

Equity :

• Equity is the net amount of funds invested in a business by its owners.
• Equity = Assets - Liabilities

2. Personal Account :

• Personal account includes accounts of persons or organisation with whom the business has dealings.
  1. Natural personal accounts : It includes accounts of persons such as Ram's account, Manoj's account.
  2. Artificial or legal personal accounts : It includes accounts of organisations such as accounts of company, club and government
  3. Groups or Representative personal accounts : It includes accounts that representing group of persons such as outstanding salaries account for employees, rent and wages etc.
• Golden Rule :
  • Debit the receiver
  • Credit the giver

3. Nominal Account :

• Nominal accounts represent accounts for incomes, gains, expense and losses.
  • Examples : rent account, rates account, insurance account.
• Golden Rule :
• Debit all losses & expenses
• Credit all incomes & gains
• Net Income= Revenue - Expenses.
• Revenues are the assets earned by company's operations and business activities.
• Expenses are the money spent or cost incurred in an entity's efforts to generate revenue.