List of real accounts

Shareholders equity is the value of assets that are available for the shareholders of the company after the payment of the due liability.

Real forex bonuses

The examples of the same are retained earnings, common stock, etc. The disadvantages are as follows:

Real accounts

Real accounts definition

Real accounts are the accounts that do not close its balances at the end of the financial year but the same retains and carries forward its closing balance from one accounting year to another and so on. In other words, the closing balance of these accounts in one accounting year becomes the opening balance of the succeeding accounting year. These accounts are also called as permanent accounts.

The golden rule that applies to a real account is that the organization should debit what is coming in the organization and credit the items that are going out of the organization.

Examples of real accounts

The following are the items that are present in the financial statement of the company that is considered to be examples.

#1 – assets

Any resource of the business organization which is owned by the organization and has a monetary value that can help to generate revenue and is also available to meet the liabilities of the organization are the assets of the business. The assets are further classified into two different categories which are as follows:

Tangible assets: the assets that can be seen or touched are considered tangible assets. The example of the tangible assets includes cash, furniture, inventory, building, machinery, etc.

Intangible assets: the different assets that cannot be felt or touched are considered as intangible assets. Examples of intangible assets include patents, goodwill or trademark, etc.

#2 – liabilities

These are the legal, financial obligations that an organization owes to someone else. Examples of liabilities are loans payable, accounts payable, which include creditors, bills payable, etc.

#3 – stockholder’s equity

Shareholders equity is the value of assets that are available for the shareholders of the company after the payment of the due liability. The examples of the same are retained earnings, common stock, etc.

Journal entries of real accounts

Let’s take the example of mr. X, who has a business in the purchase and sale of the different mobile phones in the area where its business is situated. In the business, he purchased furniture, having a value of $5,000 by paying cash for the same. Analyze the same considering the real accounts.

In the case of the above example, the journal entry for the transaction in the books of accounts of mr. X will be as follows:

Particulars	amount
furniture A/C …..Dr	$5,000
to cash A/C	$5,000

In the above journal entry, there is an interaction between two different types of assets, i.E., furniture and the cash account, which are classified as the real accounts. Firstly, the furniture account is debited as per the rule, i.E., debit what comes in, and the cash account is credited as per the rule credit what goes out. Both are reported in the balance sheet of the company.

Advantages

The advantages are as follows:

It becomes easier to do journal entry because of the rule of debit what comes in and credits what goes out as it clarifies on which side, i.E., on the debit side or the credit side is needed to be posted.

It provides the closing balance of the assets and the liabilities that are reported in the balance sheet and then carried forward in the next accounting year.

Disadvantages

The disadvantages are as follows:

If there is an error in the closing balance of the real accounts in any accounting year, then in the next accounting year also the same error gets carried forward. It happens as the closing balance of one accounting year is the opening balance of the succeeding accounting year.

Important points

The different important points are as follows:

These accounts are shown on the balance sheet of the organization, which reports the stakeholder’s equity, liabilities, and the assets of the business.

The word ‘real’ here refers to the permanent and perpetual nature of these accounts. These accounts remain active from the beginning of the business until its end.

The golden rule that is applicable is that the organization should debit what is coming in the organization and credit the items that are going out of the organization.

Conclusion

Real accounts, also known as the permanent accounts, are the accounts balances that are carried from one financial year to another accounting year. I.E., the closing balance in one accounting year of the company becomes the opening balance of the succeeding accounting year in its balance sheet. Examples include the assets, liabilities, and the stockholder’s equity. It remains active from the beginning of the business until its end. It is possible to have a temporary zero balance in some of these accounts.

Types of accounts: real, personal and nominal accounts with examples

There are credit and debit rules of accounting which is referred as 3 golden rules of accounting. It is also referred as 3 types of accounts in accounting. Here we will also see examples of real account, examples of nominal account as well as examples of personal account. Let us understand further in detail:

Three types of accounts into accounting system are:

1. Real account definition:

Any kind of assets which is either tangible (for example: land, stock, building, etc.) or intangible (for example: goodwill, copyrights, patents, etc.) are categorized into real account.

Frist golden rule – real accounts

debit what’s come in and credit what goes out.

Example of real accounts:

Mr. Joe purchased furniture of rs.75,000/- for cash.

Accounts	debit	credit	applied rules
furniture A/c	75,000	debit what’s come in.
To cash A/c	75,000	credit what goes out.

Wiki Finance pedia - e-learning course on Accounting Wikipedia Chapter - Types of Accounts Real, Personal and Nominal Accounts

Real accounts are one of the three types of accounts. As per the first golden rule of real accounts – furniture A/c is debited with rs.75,000/- and cash A/c is credited with rs.75,000/-.

2. Personal account definition:

Those accounts which are either directly or indirectly related to individuals, companies, firms or organisations are known as personal account. Example of personal accounts includes: kumar account, xyz pvt. Ltd. Account, capital account, prepaid account, bank account, drawings account, creditors account, outstanding account, debtors account, suppliers account, etc.

Second golden rule – personal accounts

debit the receiver and credit the giver

Example of personal accounts:

Mr. Jennifer paid rs.45,000/- to xyz-pqr private limited company by cheque.

Personal accounts are one of the three types of accounts. As per the second golden rule of personal accounts – xyz-pqr pvt. Ltd. A/c is debited with rs.45,000/- and bank A/c is credited with rs.45,000/-.

3. Nominal account definition:

Those accounts which are associated with income, gains, losses or expenses are known as nominal account. At the end remaining balances of nominal accounts are then posted to capital account.

Third golden rule – nominal accounts

debit all expenses & losses and credit all income’s & gain’s

Example of nominal accounts:

Ms. Jenny purchased goods of rs.22,000/- for cash.

Nominal accounts are one of the three types of accounts. As per the third golden rule of nominal accounts – purchase A/c is debited with rs.22,000/- and cash A/c is credited with rs.22,000/-.

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Basics of accounting for beginners

Chapter 1: what is accounting with examples

Chapter 2: objectives of accounting

Currently reading: types of accounts

Chapter 4: branches of accounting

Chapter 5: accounting process

Chapter 6: what is assets and current assets?

Chapter 7: what is liability and current liabilities?

Chapter 8: what is revenue and expenses?

Chapter 9: what is a single entry system?

Chapter 10: what is double entry system?

Chapter 11: what are journal entries? Format and examples

Chapter 12: what is a general ledger? Format with example

Chapter 13: what is a trial balance? Examples and limitations

Chapter 14: what is a profit and loss statement or income statement?

Chapter 15: what is a balance sheet? Definition, format and examples

Chapter 16: what is managerial accounting? Role, job and objectives

Chapter 17: accounting quiz – basics of accounting for beginners module

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Types of accounts вђ“ personal, real and nominal accounts

Types of accounts

The debit and credit accounts rules are based on three types of rules, which are also called as types of accounts in accounting. The different account types are

Personal 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 kartвђ™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.

Date	particulars	amount	amount	rule applied
20-jun-19	ABC limited	5000	debit the receiver
20-jun-19	to bank account A/c	5000	credit the giver

Real accounts

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 : вђ“ buildings, furniture, machines, etc.

E.G of intangible assets: вђ“ 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

Date	particulars	amount	amount	rule applied
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

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: вђ“ 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.

Digital citizen

In certain situations, you may need to extract a list with all the user accounts that exist on a windows device. Or you may want to know the hidden user accounts that exist alongside your user account. To help you out, we compiled a list of four methods that you can use to see all the users, including the hidden ones created by windows or third-party apps that you installed. Here they are:

NOTE: this guide covers windows 10, windows 7, and windows 8.1. If you do not know the version of windows that you have, read this tutorial: what version of windows do I have installed?

See the list of all user accounts, using the net user command, in powershell or CMD

This works both in the command prompt and powershell. Open the app that you prefer and then type net user and press enter. This command lists all the user accounts that exist in windows, including hidden ones or disabled user accounts. These user accounts are listed with their internal name that windows uses behind the scenes, not their full display name that you see when you sign into windows.

You can have this list stored in a text file which can be opened with notepad. Type net user > filename.Txt and a file with the name you provided is created under “C:\users\your user name.”

If you want to create the text file in a specific location, enter net user > “pathfilename.Txt” and press enter.

A neat trick is that you can use this command to find information about a specific user account. Type net user username and press enter. Windows then displays useful information about that user account, like when the password was set the last time, when it expires (if it is set to expire), the groups that it is a part of, and more.

If you want to know more about this command and all its parameters, go to this documentation page: net user.

See the list of all user accounts, using the computer management tool

Another method that displays all user accounts, including hidden users or disabled ones, involves using computer management. Open computer management, and go to “local users and groups -> users.” on the right side, you see all the user accounts, their names as used by windows behind the scenes, their full names (or the display names), and a description for each.

Double click on a user account to learn more about its properties and settings, including the groups that it is part of.

See a list of active user accounts, using the control panel

A method that is less geeky but which also displays less information, involves opening the control panel. After you start it, go to “user accounts” or “user accounts and family safety,” depending on the windows version that you have.

Then, click or tap user accounts.

Now you see your user account, information about it and several links. Click or tap the link that says “manage another account.”

Now you see the active, not-hidden user accounts that exist in windows, and whether they are local accounts, administrators, etc.

With this method, you cannot see hidden or disabled user accounts.

See a list of active user accounts, on the sign in screen

The obvious and most straightforward method is to look at the sign in screen, just before you log into windows. On this screen, you should see displayed all the active (and not hidden) user accounts that exist in windows. If you are using windows 10, this list is shown in the bottom-right corner of the sign in screen.

If you are using windows 7, all active user accounts should be displayed front and center.

The same is true when using the windows 8.1 sign in screen.

The downside of this method is that you cannot see hidden or disabled user accounts.

Did you find many hidden user accounts on your windows PC?

We highly recommend trying the first two methods for identifying all the user accounts that exist on your windows computer or device. You may be surprised to see that some of your apps created hidden user accounts that you had no idea existed. Before closing this tutorial, share in a comment whether you found hidden user accounts on your PC, and how many of them were there. We are curious to know.

Chart of accounts – how to get organized & efficient

Tedious as it may seem, every business transaction needs to be recorded in the right account. The problem, however, is that unless you have automated accounts payable software, finding the correct account isn’t always such a simple task. Fortunately, a chart of account can help you with that.

Whenever you need to find a line item on an old invoice, do you find yourself having to go back and search through mountains of paperwork, or thumb through rows of filing cabinets drawers? If so, then you would benefit from using a chart of accounts.

Having a complete list of accounts being run by your company makes for simple tracking and frictionless logging. In many organizations, they’re a necessary tool for organizing financial records and setting up accounting systems.

To get you up to speed regarding what a chart of accounts is, how they’re used, and why they’re vital for your business’s success, we put together this comprehensive guide. In it, we will show you why a chart of accounts isn’t just a “nice-to-have” tool, but an organizational necessity if you want to grow your business and manage multiple accounts at scale.

Chart of accounts 101

A chart of accounts (COA) is a list of all accounts—including asset, liability, expense, revenue, and equity—that are included in a business’s general ledger. The size of the company will largely determine the number of accounts listed in a company’s COA. For instance, your local mom and pop shop might have a dozen total accounts whereas microsoft likely has hundreds.

While this provides a basic chart of accounts definition, it doesn’t quite make clear where the value of a COA is found. The central purpose of a COA is to provide a foundation within which all of a company’s financial records are kept according to an easy-to-follow, logical structure.

We’re often asked, “in which order are the accounts listed in the chart of accounts?” fortunately, the answer is simple. Accounts are listed in the order that they appear on a company’s financial statements, such an income statement or balance sheet. Therefore, the COA starts with cash, moving on to liabilities and equity, and eventually finishing with revenues and expenses.

Balance sheet accounts

Assets

Liabilities

Owner’s equity

Income statement accounts

Operating revenues

Operating expenses

Non-operating revenues and gains

Non-operating expenses and losses

Sample chart of accounts

To get a better idea of what a chart of accounts is and what it looks like, refer to the following sample. Although no two charts will look identical, most will follow a basic framework that resembles what you see below, especially if you’re a small company with few vendors and a limited number of products.

Occasionally, you may find a chart of accounts that is organized by department. For instance, it’s not uncommon to find similar expense information listed for the accounting department, marketing department, software development department and so forth that all share the same characteristics.

The size and scope of the organization will ultimately determine how this information is presented—with greater uniformity among smaller firms.

1000 ASSETS

1001 CASH – operating account

1002 CASH – petty cash

1003 CASH – debitors

1100 RECEIVABLES

1110 A/REC trade

1120 A/REC receivable (trade notes)

1130 A/REC receivables (installment)

1140 A/REC retainage withheld

1190 A/REC uncollectible accounts allowance

1200 INVENTORIES

1210 INV – reserved

1220 INV – work-in-progress

1230 INV – reserved

1240 INV – unbilled costs & fees

1250 INV – finished goods

1280 INV – reserve (obsolescence)

1300 EXPENSES (PREPAID) & OTHER ASSETS

1310 prepaid insurance

1320 prepaid real estate taxes

1330 prepaid rent

1340 prepaid maintenance & repairs

1350 prepaid deposits

1400 EQUIPMENT

1410 PPE – buildings

1420 PPE – vehicles

1430 PPE – machinery

1440 PPE – laptops & computers

1450 PPE – fixtures

1460 PPE – leasehold

1500 DEPRECIATION & AMORTIZATION (ACCUMULATED)

1510 ACC DEP – buildings

1520 ACC DEP – vehicles

1530 ACC DEP – machinery

1540 ACC DEP – laptops & computers

1550 ACC DEP – fixtures

1560 ACC DEP – leasehold

1600 RECEIVABLES (NON-CURRENT)

1610 NCA – installment receivables

1620 NCA – notes receivable

1630 NCA – retainage (withheld)

1700 RECEIVABLES (INTERCOMPANY)
1800 OTHER ASSETS (NON-CURRENT)

1810 intellectual property, patents & licenses

1820 intangible assets

1830 organizational costs

1900 LIABILITIES
2000 PAYABLES

2010 A/P trade

2020 A/P retainage withheld

2030 A/P accrued accounts payable

2040 long-term debt current maturities

2050 construction loans payable

2060 bank notes payable

2100 ACCRUED COMPENSATION

2110 accrued payroll

2120 accrued commissions

2130 accrued unemployment taxes

2140 accrued FICA

2150 accrued medical benefits

2160 accrued 401(K) match

2170 W/H medical benefits

2180 W/H 401 (K) employee contribution

2200 ACCRUED EXPENSES

2210 accrued rent

2220 accrued interest

2230 accrued taxes

2240 accrued warranty expense

2300 ACCRUED TAXES

2310 accrued federal income taxes

2320 accrued state income taxes

2330 accrued franchise taxes

2340 deferred state income taxes

2350 deferred FIT current

2400 DEFERRED TAXES

2410 FIT – NON CURRENT

2420 SIT – NON CURRENT

2500 LONG-TERM DEBT

2510 LTD – notes payable

2520 LTD – installment notes payable

2530 LTD – mortgages payable

2600 PAYABLES (INTERCOMPANY)
2700 LIABILITIES (NON-CURRENT)
2800 EQUITIES (OWNERS)

2810 common stock

2820 preferred stock

2830 partners capital

2840 paid in capital

2850 member contributions

2890 retained earnings

3000 REVENUE

3010 REVENUE – PRODUCT 1

3020 REVENUE – PRODUCT 2

3030 REVENUE – PRODUCT 3

3100 interest income

3200 other income

3300 sales returns and allowances

3350 sales discounts

3400 finance charge income

4000 COST OF GOODS SOLD

4010 COGS – PRODUCT 1

4020 COGS – PRODUCT 2

4030 COGS – PRODUCT 3

4100 freight

4200 inventory adjustments

4500 purchase returns

4600 reserved

5000 – 6000 OPERATING EXPENSES

5010 amortization expense

5020 advertising expense

5100 auto expense

5200 bad debt expense

5300 bank charges

5400 cash over and short

5500 commission expense

5600 depreciation expense

5700 employee benefit program

5900 office expense

6000 payroll taxes

6100 rent

6200 taxes – FIT expense

6300 utilities expense

6900 gain/loss on sale of assets

Most chart of accounts examples will follow a similar design as the one listed above. While this might prove useful for learning about how a chart of account is structured, a chart of accounts example says little about how it should be interpreted or its underlying logic.

Making sense of the COA

Think of a business as an organic, living entity—like a tree—with various branches that each correspond to a different department (i.E., sales, marketing, human resources, etc.).
Each branch on this tree has its own expenses and liabilities to take care of, which can be visualized as leaves on the tree.

Therefore, every department contains enumerated accounts that appear on the COA. To extend the analogy further, you can think of the accounts subtypes as the ripples on the leaves. On a standard COA, a typical account coding scheme will appear like this:

Assets: 100 -199

Liabilities: 200 – 299

Equity: 300 – 399

Revenues: 400 – 499

Expenses: 500 – 599

You may have noticed that chart of accounts numbering is a little wonky and seemingly all over the place. However, the COA numbering system follows a careful internal logic that is structured according to three components:

Division code: A two-digit serial number that specifies the company division if the company has more than one division or has multiple subsidiaries.

Department code: A two-digit serial number that specifies the company department within a multi-department company (i.E., marketing, sales, etc.).

Account code: A three-digit serial number that corresponds to an account type (i.E., revenue, liabilities, etc.).

When put together, the above codes form a pattern that resembles an “xx-xx-xxx” serial number. However, smaller companies with one division may only include the latter two components, forming “xx-xxx.” altogether, a chart of accounts number for advertising expenses (“660”) within a marketing department (“07”) within a single-division company will appear as: 07-660.

Accessing the quickbooks chart of accounts

If you’re one of the many small to medium-sized enterprises that uses quickbooks to manage your books, you’ll be relieved to know that sample charts of accounts for quickbooks are available. When you create your account, you can select from a variety of pre-created coas or import a CSV file that contains a chart of account template manually.

No matter whether you’re using intuit’s quickbooks desktop 2019 or the latest quickbooks online (QBO), there are several chart of accounts template types that can be selected from the “lists” drop-down under the “company” tab. Alternatively, you could press “CTRL+A” on your keyboard while using quickbooks.

Avidxchange has an integration with quickbooks where you can automate your accounts payable processes. You can learn more about our quickbooks integration here.

Clean up your chart of accounts by automating your payables

Simply by looking at your chart of accounts, you can see how much money your company has, how much it owes, and how much is coming in and out of the company.

For a record this important, it’s crucial that you invest in the best software available to automate your invoices & bookkeeping to keep the document readily accessible at a moment’s notice.

Thankfully, digital tools exist so you can import your paper-based chart of accounts and store it securely within a digital environment. This way, you never have to worry about tracking down a dollar amount from an old invoice or searching endlessly through pen-and-paper account records. Instead, you can pinpoint any account in seconds using automated AP solutions with the click of a button.

What are the three types of accounts?

There are mainly three types of accounts in accounting: real, personal and nominal, personal accounts are classified into three subcategories: artificial, natural, and representative.

If you fail to identify an account correctly as either a real, personal or nominal account, in most cases, you will get end up recording incorrect journal entries.

1. Real accounts

All assets of a firm, which are tangible or intangible, fall under the category of ‘real accounts’.

Tangible real accounts are related to things that can be touched and felt physically. Few examples of tangible real accounts are building, machinery, stock, land, etc.

Intangible real accounts are related to things that can’t be touched and felt physically. Few examples of such real accounts are goodwill, patents, trademarks, etc.

The golden rule for real accounts

The transaction below shows the interaction of two different real accounts: one is ‘ furniture’ and the other is ‘cash’, both of them are assets of the company and hence classified as real accounts.

Purchased furniture for 10,000 in cash

accounts involved	debit/credit	rule applied
furniture A/C	debit	real A/C – dr. What comes in
to cash A/C	credit	real A/C – cr. What goes out

*amount will be 10,000 in both debit and credit.

2. Personal accounts

Second among three types of accounts are personal accounts which are related to individuals, firms, companies, etc. Few examples are debtors, creditors, banks, outstanding account, prepaid accounts, accounts of customers, accounts of goods suppliers, capital, drawings, etc.

Natural personal accounts: this type of personal accounts is the simplest to understand out of all and includes all of god’s creations who have the ability to deal, who, in most cases, are people. E.G. Kumar’s A/C, adam’s A/C, etc.

Artificial personal accounts: personal accounts which are created artificially by law, such as corporate bodies and institutions, are called artificial personal accounts. E.G. Private companies, llcs, llps, clubs, schools, etc.

Representative personal accounts: accounts which represent a certain person or a group directly or indirectly. E.G. Let’s say that wages are paid in advance to an employee – a wage prepaid account will be opened in the books of accounts. This wages prepaid account is a representative personal account indirectly linked to the person .

The golden rule for personal accounts

The transaction below demonstrates the interaction between two different personal accounts, one of which is a private limited company and the other one is a bank.

Paid unreal company 24,000 by check

accounts involved	debit/credit	rule applied
unreal company A/C	debit	personal – dr. The receiver
to bank A/C	credit	personal – cr. The giver

*amount will be 24,000 in both debit and credit.

Related topic – difference between journal and ledger

3. Nominal accounts

Accounts which are related to expenses, losses, incomes or gains are called nominal accounts. The dictionary meaning of the word ‘nominal’ is “existing in name only“ and the meaning remains absolutely true in accounting sense too, furthermore nominal accounts do not really exist in physical form, but behind every nominal account money is involved.

Example – purchase A/C, salary A/C, sales A/C, commission received A/C, bad debt A/C, etc. The final result of all nominal accounts is either profit or loss which is then transferred to the capital account.

The golden rule for nominal accounts

The following example shows a transaction where a nominal account interacts with a real a/c.

Purchased good for 15,000 in cash

accounts involved	debit/credit	rule applied
purchase A/C	debit	nominal A/C – dr. All expenses
to cash A/C	credit	real A/C – cr. What goes out

The amount will be 15,000 in both debit and credit.

Differences between real accounts and nominal accounts

A financial year’s end statement contains a composition of several transactions within different accounts recorded in that period. Businesses record transactions in numerous accounts some of them include assets, equity, liabilities, gains, incomes, losses and expenses.

The balances in the incomes, losses and gains accounts are then closed up at end of the year and are also called the nominal accounts. Balances from the assets, equity and liability accounts are pushed forward to the next accounting year. These accounts are classified under the real accounts.

What is a nominal account?

Nominal accounts are those whose balances are closed at the end of the financial year. These accounts are also recorded in the income statement. The income statement is a summary of revenues and expenses incurred within a given period. The nominal accounts begin a new accounting or financial year at a nil balance. This is because the balance was closed at the previous year and will not be pushed onto the next year.

The other name for a nominal account is temporary account. The balances that are noted in the income statement are the accounts that have completed transactions within that period. The end amount recorded in the financial statement is then transferred to the equity category in an income statement. This final amount is called net profit or net loss. The main aim of recording the nominal accounts is to determine the financial year’s net loss or profit.

What is a real account?

Real accounts are those that are not closed in the end of an accounting year. The real accounts are reported in the balance sheet. A balance sheet is the summary of assets, equity and liabilities of the business. ‘real’ as used in this account refers to the continuous nature of the account type. This account type is active throughout the accounting year. It is also known as the permanent account. The accounting year balances are carried forward into the next year since they are not closed at the end of a period.

Differences between nominal and real accounts

Definition

Nominal accounts are also called temporary accounts and are defined as the account types that determine the net loss and profits in the balance sheets.

The real accounts are also known as permanent accounts and are kept open throughout a year and its balances are carried forward to the next accounting year.

Time of closing account

Nominal accounts are closed at the end of the year.

Real accounts are not closed at the end of an accounting period. They are left open and the balances carried forward to the next year’s accounting statement.

Account type

The nominal account contains accounts like the incomes, gains, expenses and losses.

The real account consists of the assets, owner’s equity and liabilities account types.

Financial statement used

The nominal accounts are noted in the business’s income statement.

The real account transactions are noted in a balance sheet.

Purpose

The main purpose of a nominal account is to determine the net profits and losses of a business.

The main aim of real accounts is to determine the company’s financial standing in terms of what it owns vs. What it owes.

Types of accounts

Types of accounts in accounting

Real account:- real accounts are related to asset account which can be touched felt, eg building account, machinery account ,stock,furniture etc

Personal account:- personal accounts are related to persons , institutions companies. Examples are bank account, creditors a/c etc. Personal accounts are sub-divided into natural persons and artificial persons. Natural persons are individuals or human .Where are artificial persons are the organizations created by law like companies, trusts, firms etc.

Nominal account:- nominal accounts are related to income and expenses or losses and gains , examples are rent, commission, salary etc

What is dual aspect

Car is coming in to business

Cash going out from the business

Rules for debit and credit

The rules of debit and credit is popularly known as golden rules of accounting in india.These rules are the pillars of accounting.All financial statements are based on these rules.

Real account

The rules for real account in accounting is

Debit what comes in

Credit what goes out

Particulars	debit(dr)	credit(cr)
furniture	2500.00	0.00
cash	0.00	2500.00

Personal account

The rule for personal account is

Debit the receiver

Credit the giver

Particulars	debit(dr)	credit(cr)
furniture	3000.00	0.00
mozart furnitures	0.00	3000.00

Nominal account

Debit all expenses or losses
credit all incomes or gains

Particulars	debit(dr)	credit(cr)
salary	100000.00	0.00
cash	0.00	100000.00

Balance of real account

Real accounts are relate to assets.When assets are received in the business the particular asset accounts are debited.When assets are sold or otherwise disposed of, the particular assets accounts are credited.So if an asset account has a balance it must be a debit balance.It indicates the value of asset in the possession of business.

Balance of personal account

The debit balance of a personal account indicates debts owing by the person and credit balance indicates debts owing to the person concerned.For the business the first one is account receivable or asset ,while the second is account payable or liability. The debit balance of all personal accounts on a certain date put together will make sundry debtors and the credit balances of all personal accounts put together will make “sundry creditors”sundry debtors are assets and sundry creditors are liabilities.Where as asset accounts have debit balances liability accounts have credit balances.

Closing of nominal accounts

Only accounts relating to assets and liabilities ,that is real account and personal accounts are balanced periodically.Nominal accounts are accounts of expenses and incomes.They are not balanced;they are closed at the end of the trading period by transferring the amounts to the debit and credit of a profit and loss account.Before a nominal account is closed it will either show a debit balance ( expense) or a credit balance ( income).

Do it your self

Find out the debit and credit aspects of the following transactions

01-07-2016 purchased land for 105000.00

02-07-2016 purchased goods from S.K creation on credit 200000.00

03-07-2016 stationery purchased for 1000.00

03-07-2016 goods sold to indian cotton for credit 45000.00

05-07-2016 rent paid to building owner 1500.00

06-07-2016 cash withdrawn for personal use 5000.00

07-07-2016 tea expenses incurred for staff 100.00

08-07-2016 computer purchased from computer solutions 30000.00

15-07-2016 paid commission 500.00

20-07-2016 deposit cash in to SBI 15000.00

20-07-2016 cash sales 25000.00

21-07-2016 cheque received from indian cotton 25000.00

22-07-2016 goods returned by indian cotton 2500.00

28-07-2016 cash withdrawn from SBI 10000.00

31-07-2016 goods returned to S.K creation 5000.00

Click on below link TO KNOW THE ANSWERS

journal
sr no	date	particulars	ledger folio( LF )	debit amount	credit amount
1	1/7/2016	land A/c ………dr	105000.00
to ; cash	105000
(being purchase land)
2	2/7/2016	purchase A/c …..Dr	200000
to; S.K creation	200000
(goods purchased from SK creation on credit)
3	3/7/2016	printing & stationery A/c ….Dr	1000
to; cash	1000
being stationery purchased as per bill noxxxx
4	3/7/2016	indian cottons A/c ……..Dr	45000
to; sales	45000
(being credit sales to indian cotton)
5	5/7/2016	rent A/c …………….Dr	1500
to;cash /ac	1500
(rent paid for the month of june)
6	6/7/2016	drawings A/c ………dr	5000
to; cash	5000
( cash drawn for personal use)
7	7/7/2016	staff welfare A/c……. Dr	100
to; cash	100
(tea expense for staff )
8	8/7/2016	computer A/c ……dr	30000
to; computer solutions	30000
( being computer purchased from computer solutions for credit)
9	15/07/2016	commision A/c …………..Dr	500
to; cash	500
( paid commission)
10	20/7/2016	SBI A/c …………..Dr	15000
to; cash	15000
( cash deposited in SBI)
11	20/7/2016	cash ……………………dr	25000
to; sales	25000
( cash sales)
12	21/7/2016	SBI ( BANK A/C) ….Dr	25000
to; indian cotton	25000
(being cheque received from indian cotton)
13	22/7/2016	sales retrun A/c ………dr	2500
to; indian cotton	2500
( being goods returned by indian cotton)
14	28/07/2016	cash A/c ……………..Dr	10000
to; SBI A/c	10000
( being cash withdrwan for business use)
15	31/7/2016	S.K creation …………dr	5000
to; purchase return	5000
( goods returned to sk creation)

17 thoughts on “ types of accounts ”

First of all you have to write the journal entrys as for business transaction you can divided in to ledger performer if it is case transaction you should enter the cash ledger

In accounts tea expenses made sum of rs 200, for cash payment what account head i want to account?

You can create account like ” staff welfare expense” “tea expense” etc

Thanx a tonne… ��
it was so simple

Single ledger-create or add any ledger under any parent group.. Aftr tht display the list of ledger u have created then u want to changes usinf alter-delete or modification in ledger..

Thank s for good info sir i want more material