Account can be classified into two main categories;
a). Personal account.
b). Impersonal account.
1. PERSONAL ACCOUNT
Personal account is for a name of persons or organizations. May contributes either asset or liabilities of the business. They are either sundry debtors or creditors.
2. IMPERSONAL ACCOUNT
Impersonal accounts are sub divided into namely real Account and Nominal account.
2.1 REAL ACCOUNT
Represent all possessions of the business e.g. Cash, bank, motor van, furniture, filling stock and premises.
2.2 NOMINAL ACCOUNT
Are further sub divided into two:-
a) Revenue accounts:
E.g. Discounts received, Sales, commission received and other income, revenue account are capital in nature.
They have an increase effects.
b) Expenses accounts:
E.g. Purchased discount allowed and wages expenses accounts are also capital in nature
but they have a decrease effects.
Example:
|
Name of account |
Classification |
|
1. Building |
Real account |
|
2. Furniture |
Real account |
|
3. Sales |
Nominal account |
|
4. Purchases |
Nominal account |
|
5. Capital |
Personal account |
|
6.Cash |
Real account |
|
7.Bank |
Real account |
|
8. Mwita |
Personal account |
|
9. MUHIMBILI Hospital. |
Personal account |
|
10 .Motor van |
Real account |
|
11 Profit |
Nominal account |
|
12. Discount allowed |
Nominal account |
|
13. Discount received |
Nominal account |
|
|
|
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