Traditional classification of Accounts

1. Classification of Accounts 1. Real Accounts 2. Personal Accounts and 3. Nominal Accounts There are three types of accounts:

2. Classification of Accounts 1. Real Accounts: relating to tangible and intangible assets e.g. Cash, Machinery etc.

3. Classification of Accounts 2. Personal Accounts: relating to natural persons, artificial persons or representative persons. a. Natural personal accounts such as Ram’s A/c, Shyam’s A/c etc. Mr.Shyam Mr. Ram

4. Classification of Accounts b. Artificial persons such as Bank A/c, XYZ ltd. A/c etc.

5. Classification of Accounts Or c. Representative personal accounts such as Salary outstanding A/c, Prepaid rent A/c etc. When will I get my salary? Employee

6. Classification of Accounts 3. Nominal Accounts: relating to incomes, gains, expenses and losses etc. Salary Wages