Skip to main content

Accounting - Classification of Accounts

Accounting Classification

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
  • Real accounts
    • Tangible accounts
    • Intangible accounts
Let us go through them each of them one by one.

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.

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.
SOURCE: TUTORIAL POINTS
Feel free to login to www.ezaccounting.com.sg
Labels:
Location: Singapore

Comments

Post a Comment

Popular posts from this blog

Benefits Of Computer Register

Benefits of Computerized Register When employing a  computerized  method of accounting the on pc, input screens are designed for simple use. The most advantage is that every group action wants solely to be inputted once, in contrast to a manual double entry system wherever 2 or 3 entries are needed. The computerized ledger system is absolutely integrated. This suggests that once a business group action is inputted on the pc it’s recorded in an exceedingly range of various  accounting records  at identical time. The main benefits of a computerized register are listed below: Speed Knowledge entry onto the pc with its formatted screens and inbuilt databases of consumers and provider details and stock records may be applied way more quickly than any manual process. Automatic document production Quick and correct documents production of invoice, credit note, purchase order, printing statement and payroll document are all done mechanically. Accuracy ...
Post a Comment
Read more

MYOB Advanced Business – An Overview

MYOB Advanced Business – An Overview Experience in a fully featured commercial enterprise control gadget that covers your complete commercial enterprise operations, from administration to warehouse and the whole thing in between. Each place of yourbusiness can advantage from MYOB advanced commercial enterprise, be it reduced management time, extra inventory manipulate or actual time control reports – the gains are sizable and substantial. Our local certified community of MYOB superior enterprise companions manage all implementation, training and aid so you acquire the professional, man or woman attention your enterprise deserves. Harness the strength, efficiency and flexibility of the  MYOB software advanced cloud platform for your business. + The usage of the organizational workflow engine – outline movements and approval requests. + Send e-mail notifications to users, customers and providers when sure conditions are happy, like a shipped order or an assigned lead. +...
Post a Comment
Read more

How is Artificial Intelligence Changing the Accounting Industry?

Many accounting companies have started introducing Artificial Intelligence to their business consecutively to shrink the number of time accountants are spending on different tasks, eventually removing tiresome and recurring tasks within the business. In order to understand how AI will positively change accounting without machines taking jobs away from humans, understanding how it works is key – Let’s take a deep look into how machine learning will change the accounting industry. 1. Automated Reporting The AI-powered software system has automated the process of report preparation and translating information into an actionable language which will be simply understood by the end user. It will cut back up to 90% of processing time and price of financial report generation. There are some other AI-based startups that facilitate companies extract meaning parameters from the bills and invoices and further, help them within the categorization of monetary documents. 2. Audit ...
Post a Comment
Read more