classification of Account & golden rules of accounts

 Classification of Account:

Meaning of Account:-

              An account is a summarized record of transactions relating to a particular person, assest, liability, particular heah of expenses or income recorded at one place. In day to day business activity large number of business transaction takes place. It affects the several acoount. At the end of certain period of time it is necessary for owner or businessman to balance the account to find out the information like liabilites , assets, income, expenses and capital of the business.

Definition of Account:-

               According to G.R.Batliboi "An account summarized record of transactions affecting one person, one kind of property or one class of gain or loss."

1) personal account:

                 This account represent a person and group of person with whom business deals. These accounts are classified into following three categories:-

    A)Natural person's account:-

                 Account relating to individulas human beings. e.g. rajesh' a/c, mr. x a/c

    B) Artificial person's account 

                Aritificial persons means includes account of organization, associations which are created by law e.g. Bank of maharashtra a/c, abc & co a/c

     C) Representative personal account:

                 These account represent a certain person or group of person in business dealing. accounts relating to oustanding and prepaid items are called representative personal account.

e.g. o/s rent a/c. income received in advance etc.

 

2) Impersonal Account:

    Impersonal account are classified into following two categories:

     1. Real Accounts:

           This account represents assets and properties owned by the business. the following are the types of real account.

     a) Tangible real account:

           Tangible real account means the assets and properties, which can be seen, touched and felt. machinery, motor car.

     b) Intangible real account:

            Intangible real account means assets which cannot be seen, touched, or felt but they can be measured in terms of money e.g. goodwill, patents, etc.

       2) Nominal account:

              The  account of expenses , losses, income and gains are called Nominal account.

Golden rules of debit and credit:-

E.g:-

1) Business commenced with capital Rs. 200000

Account involved	Nature	Dr./Cr.	Journal entry
Cash A/C	Real A/c	Debit (what comes in)	Cash A/c          Dr.
Capital A/C	Personal A/c	Credit (giver)	To Capital A/c

2) Salary paid Rs. 7000

Account involved	Nature	Dr./Cr.	Journal entry
Salary A/c	Nominal A/c	Debit (expense)	salary A/c          Dr.
bank A/C	Personal A/c	Credit (giver)	To Bank A/c

3) Dividend Received

Account involved	Nature	Dr./Cr.	Journal entry
bank A/C	Personal A/c	Debit (receiver)	Bank A/c Dr.
Dividend A/c	Nominal A/c	Credit (income)	To Dividend A/c