Classification of Accounts

Accounts recording transactions concerning persons or firms or organization are known as private accounts. Personal accounts may perhaps further more be labeled as :

(one) Purely natural person's personal accounts: The accounts recording transactions referring to individual human beings e.g., Anand's A/c, Remesh's A/c, Pankaj's A/c are categorised as purely natural person's particular accounts.

(2) Synthetic person's private account: The accounts recording transactions referring to limited companies. financial institution, firm, institution, visit us. and so forth. e.g. Delhi Cloth Mill; Hans Raj College or university; Gymkhana Club are classified as synthetic persons' private accounts.

(3) Agent private accounts: The accounts recording transactions regarding the charges and incomes are categorized as nominal accounts. But in particular situations due to matching notion of accounting the quantity, over a certain date, is payable towards the folks or recoverable from people today.

This kind of total (a) relates to the particular head of expenditure or cash flow and (b) signifies folks to whom itis payable or from whom it is recoverable. Such accounts are classified as representative private accounts e.g. "Wages Fantastic Account", Pre-paid Coverage Account. and many others.

True Accounts

The accounts recording transactions concerning tangible matters (that may be touched, acquired and bought) this sort of as items, money, making. machinery and many others., are labeled as tangible actual accounts.

Whereas the accounts recording transactions associated with. intangible factors (which never have physical form) this sort of as goodwill, patents and copy legal rights. trade marks and so forth., are classified as intangible actual accounts.

Nominal Accounts

The accounts recording transactions regarding the losses, gains. bills and incomes e.g., Rent, salaries, wages, commission, interest, poor money owed etc. are classified as nominal accounts. As presently reviewed, anywhere a nominal account signifies the quantity payable to or receivable from sure individuals it is actually often known as consultant individual account.

Guidelines of Debit and Credit rating (classification based)

one. Private Accounts: Debit the receiver, Credit score the giver (provider)

2. Genuine Accounts: Debit what comes in, Credit what goes out

3. Nominal Accounts: Debit fees and losses, Credit score incomes and gains.,

Hints for Journalizing

The following dialogue can help in diagnosing the transaction with a look at to find out which accounts are relevant for passing the journal entry.

one. Remedy of cash/credit transaction.

Read through diligently the following transactions:

(i) Purchased goods for Rs. one,200 income. . (ii) Purchased goods for Rs. one,200. (iii) Purchased products for Rs. 1,two hundred from Arun. (iv) Ordered products for Rs. 1,two hundred from Arun on hard cash.

Transaction (i) and (iv) are very clear because it has become exclusively mentioned that purchases are actually designed on money. Therefore the entry is :