Classification of Accounts
Understanding how to categorize different business transactions is the first step toward accurate bookkeeping.
ACCOUNTS
Personal
Personal A/c
Related to Persons
These accounts are related to individuals, firms, companies, or representative groups.
ExampleRam A/c, OnePro Systems A/c
Real
Real A/c
Related to Assets
These accounts are related to assets or properties of the business, whether tangible or intangible.
ExampleCash, Furniture, Machinery
Nominal
Nominal A/c
Expenses & Income
These accounts are related to expenses, losses, incomes, and gains of the business.
ExampleSalary, Rent, Interest Received
Properly classifying an account is critical because it determines which Golden Rule of accounting will be applied during the journal entry process.