Classification of accounts
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Accounts can be classified as either personal or impersonal. Personal accounts relate to individuals, companies, or organizations and can be further broken down into natural persons, artificial persons, and representative persons. Impersonal accounts can be real or nominal. Real accounts represent assets and appear on the balance sheet, classified as tangible or intangible. Nominal accounts relate to income and expenses and appear on the profit and loss statement. Proper classification of accounts helps ensure correct financial statement preparation and accurate bookkeeping entries.
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Classification of accounts || personal account || real account || nominal acc...
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Jan 1: Capital 80,000
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This document defines key accounting terminology used in business. It explains that a proprietor owns and bears the risks of a business. Capital refers to the money and assets invested in a business by the proprietor. Drawings are amounts withdrawn by the proprietor for personal use, reducing capital. Goods are items purchased for resale. An accounting period is a set time frame for organizing financial records, typically a year. Other terms defined include stock, debtors, creditors, purchases, sales, assets, liabilities, income, expenses, losses, and vouchers.
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Accounting Presentation created by rushali m. sawant.pptx
The document provides an overview of accounting topics including:
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- Key accounting concepts like the double-entry system, classification of accounts, journal, ledger, trial balance, and financial statements.
- Types of accounts, capital, assets, liabilities, and transactions that are involved in accounting.
- The preparation process of final accounts which involves trading account, profit and loss account, and balance sheet.
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Classification of accounts
- 1. Name:SurbhitKatre Class: B.Com. 3rd Section :E 1 Topic:ClassificationofAccounts
- 2. Need forClassification: • It will help us to make the Correct Entries. • To prepare sound Financial Statements i.e. Balance Sheet & Profit & Loss Accounts
- 4. Personal account Personal accounts are related to any persons, firm, companies, college etc. Personal accounts may be further classified as: • Natural Persons- Eg. K. Ambani etc. • Artificial Persons- Eg. Firms, Clubs etc. • Representative Persons- Eg. Debtors etc.
- 5. Impersonal account Impersonal account may be classified as: • Real Account: Account of properties or assets are generally denotes the things owned by them. They are further classified as: Tanigble Real a/c- Eg. Goods, Cash, Building Intangible Real a/c- Eg. Goodwill, Trade mark, Patent Right, Copy Right These Accounts appears in Balance Sheet.
- 6. • Nominal Account: Account relating to expenses and income, losses & gains. Examples- Sales, Purchase, Discount allowed, Discount Received, Repairs, Salaries, Interest paid, Depreciation, Dividend, Fees etc. These Accounts appears in Profit and Loss Account.
- 7. Goldenrulesof accounting Personal A/c Debit: The Receiver Credit: The Giver Nominal A/c Debit: All expenses & losses Credit: All incomes & gains Real A/c Debit: What comes in Credit: What goes out
- 8. Thank you…