Types of Accounts
Personal accounts itself refer to a name of person and it represents an Individual or Company or any Organization.
E.g of Personal Accounts: Tutorial Kart’s Account, Customers account, etc.
Rules of Personal Accounts
If a person receive something in cash or goods, transaction will be debited and if a person gives something in cash or goods, than transaction will be credited.
- Debit the receiver
- Credit the giver
Example 1: TutorialKart paid $5,000 to ABC limited by Cheque.
|20-Jun-19||ABC Limited||5000||Debit the Receiver|
|20-Jun-19||To Bank Account A/c||5000||Credit the Giver|
Real Accounts refer to an assets owned or possessed by business. This real accounts reveals the valuation and movement of assets that occurred between firm and other parties. Assets can be real assets or intangible assets.
- E.g. of Real assets : – Buildings, Furniture, Machines, etc.
- E.g of Intangible assets: – Goodwill, trademarks, etc
Rules of Real Accounts
The assets that are coming in to business, transaction will be debited. If the assets are going out of business, than the transaction will be credited.
- Debit what comes in
- Credit what goes out
Example 1: Purchased furniture on 10th June 2019 for $790 in Cash
|10-Jun-19||Furniture A/c||5000||Debit what comes in|
|10-Jun-19||To Cas Account A/c||5000||Credit what goes out|
Nominal accounts are temporary accounts that related to incomes, expenses. revenues and losses of business. Nominal accounts are mainly deal with the amount of income earned and expenses/costs incurred. It records all expenses and incomes which are not carried forward to future.
E.g. of Nominal Accounts: – Sales, cost of goods, rent, interest, etc
Rules of Nominal Accounts
The expenses and losses of business transactions are debited, and the gains and profits of business are credited.
- Debit all expenses and losses
- Credit all gains and profits.
Example 1: Purchase of goods for $2,000 in Cash.
|10-Jun-19||Goods A/c||2000||Debit all expenses|
|10-Jun-19||To Cash Account A/c||2000||Real A/c – what goes out|