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    AKINYEMI ADISA KAMORU
    This document discusses the classification of accounts in accounting. It explains that there are three types of accounts: personal accounts for persons, real accounts for assets, and nominal accounts for expenses and incomes. Personal accounts are also known as impersonal accounts, while real and nominal accounts are known as impersonal accounts. The document provides examples for each type of account and describes the rules for debit and credit entries in accounts.

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    (5).ppt

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    AKINYEMI ADISA KAMORU
    67 views15 pages
    This document discusses the classification of accounts in accounting. It explains that there are three types of accounts: personal accounts for persons, real accounts for assets, and nominal accounts for expenses and incomes. Personal accounts are also known as impersonal accounts, while real and nominal accounts are known as impersonal accounts. The document provides examples for each type of account and describes the rules for debit and credit entries in accounts.

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    This document discusses the classification of accounts in accounting. It explains that there are three types of accounts: personal accounts for persons, real accounts for assets, and nominal accounts for expenses and incomes. Personal accounts are also known as impersonal accounts, while real and nominal accounts are known as impersonal accounts. The document provides examples for each type of account and describes the rules for debit and credit entries in accounts.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    67 views15 pages

    (5).ppt

    Uploaded by

    AKINYEMI ADISA KAMORU
    This document discusses the classification of accounts in accounting. It explains that there are three types of accounts: personal accounts for persons, real accounts for assets, and nominal accounts for expenses and incomes. Personal accounts are also known as impersonal accounts, while real and nominal accounts are known as impersonal accounts. The document provides examples for each type of account and describes the rules for debit and credit entries in accounts.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 15

    CLASSIFICATION OF ACCOUNTS

    ACCOUNTING
    ACCOUNTING

    Accounting is the language of business. The affairs and the results of the
    business are communicated to others through accounting information, which
    has to be systematically recorded and presented.
    CLASSIFICATION OF ACCOUNTS

    Every business deal with other “Person”, possesses


    “Assets”, pay “Expenses” and receive “Income”.
    So from the above, we can see every business
    has to keep
    • An account for each person
    • An account for each asset and
    • An account for each expense or income.
    CLASSIFICATION OF ACCOUNTS

    • Accounts in the names of persons are known as


    “Personal Accounts”
    • Accounts in the names of assets are known as
    “Real Accounts”
    • Accounts in respect of expenses and incomes
    are known as “Nominal Accounts”
    CLASSIFICATION OF ACCOUNTS

    ACCOUNTS

    PERSONAL IMPERSONAL
    ACCOUNTS ACCOUNTS

    REAL NOMINAL
    ACCOUNTS ACCOUNTS
    PERSONAL ACCOUNTS

    Accounts in the name of persons are known as


    personal accounts.
    Eg: Babu A/C,
    Babu & Co. A/C,
    Outstanding Salaries A/C, etc.
    REAL ACCOUNTS

    These are accounts of assets or properties. Assets


    may be tangible or intangible. Real accounts are
    impersonal which are tangible or intangible in
    nature.
    Eg:- Cash a/c, Building a/c, etc are Real
    Accounts related to things which we can
    feel, see and touch.
    Goodwill a/c, Patent a/c, etc Real Accounts
    which are of intangible in nature.
    NOMINAL ACCOUNTS

    These accounts are impersonal, but invisible and


    intangible. Nominal accounts are related to those
    things which we can feel, but can not see and
    touch. All “expenses and losses” and all “incomes
    and gains” fall in this category.
    Eg:- Salaries A/C, Rent A/C, Wages A/C, Interest
    Received A/C, Commission Received A/C,
    Discount A/C, etc.
    DEBIT AND CREDIT

    Each accounts have two sides – the left side and


    the right side. In accounting, the left side of an
    account is called the “Debit Side” and the right
    side of an account is called the “Credit Side”. The
    entries made on the left side of an account is
    called a “Debit Entry” and the entries made on the
    right side of an account is called a “Credit Entry”.
    RULES FOR DEBIT AND CREDIT

    Debit the Receiver


    Personal
    Account
    Credit the Giver

    Debit what comes in


    Real Accounts Credit what goes
    out
    Debit all Expenses
    Nominal and Losses
    Accounts Credit all Incomes
    and Gains
    Steps for finding the debit and credit
    aspects of a particular transaction

    • Find out the two accounts involved in the


    transaction.

    • Check whether it belongs to Personal, Real or


    Nominal account.

    • Apply the debit and credit rules for the two


    accounts.
    Exercise

    • Purchased a Building for Rs.20,000/-.

    • Paid Cash Rs.1,000/- to Satheesh.

    • Paid Salary Rs.1000/-.

    • Received Commission Rs.250/-.

    • Sold goods for Cash Rs.3500/-.


    Subsidiary Books

    • General Journal
    • Special Journals
    • Purchase Book
    • Sales Book
    • Purchase Return Book
    • Sales Return Book
    • Bills Receivable Book
    • Bills Payable Book
    • Cash Book
    • Petty Cash Book
    Journal

    Journal is the prime or original book of entry in


    which all transactions are recorded in the form of
    entries. Journalising is an act of recording or
    entering transactions in a Journal in the order of
    date.
    Date Particulars LF Debit Credit
    Amount Amount
    Journal Entry

    Jan 1, 1981 Prakash Started a business Rs.


    15,000/-
    Date Particulars LF Debit Credit
    Amount Amount
    1981 Cash a/c 15,000
    Jan 1 Dr. 15,000
    To Prakash’s Capital
    a/c
    (Being cash invetsed to
    business)

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