Types of Accounts | Learning Town Education

Types of Accounts

By Learning Town Education

Accounts are mainly divided into three types: Real Account, Personal Account, and Nominal Account. These three accounts form the foundation of accounting and help in recording business transactions correctly.

📚 Contents

• Types of Accounts
• Real Account
• Personal Account
• Nominal Account

1. Real Account

Real Accounts are related to assets and properties owned by the business. These accounts represent tangible and intangible assets.

Examples:

• Cash Account
• Furniture Account
• Building Account
• Machinery Account

⭐ Golden Rule of Real Account

• Debit What Comes Into Business
• Credit What Goes Out From Business

Example:
If machinery is purchased, machinery comes into the business. Therefore, Machinery Account is Debited.

2. Personal Account

Personal Accounts are related to persons, firms, companies, banks, and organizations.

Examples:

• Ram Account
• SBI Bank Account
• XYZ Company Account

⭐ Golden Rule of Personal Account

• Debit the Receiver
• Credit the Giver

Example:
If Ram gives cash to the business, Ram is the giver. Therefore, Ram's Account is Credited.

3. Nominal Account

Nominal Accounts are related to expenses, losses, incomes, and gains of the business.

Examples:

• Salary Account
• Rent Account
• Commission Received Account
• Interest Received Account

⭐ Golden Rule of Nominal Account

• Debit All Expenses and Losses
• Credit All Incomes and Gains

Example:
Salary paid is an expense of the business. Therefore, Salary Account is Debited.

Conclusion

Every business transaction is recorded through one of these three accounts: Real, Personal, and Nominal Accounts.

Understanding these accounts and their golden rules is essential for preparing journal entries and mastering accounting fundamentals.

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