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.
2. Personal Account.
3. Nominal Account.
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.
|Furniture A/c||75,000||Debit what’s come in.|
|To Cash A/c||75,000||Credit what goes out.|
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.
|Xyz-pqr Pvt. Ltd.||45,000||Debit the receiver.|
To Bank Account
|45,000||Credit the giver.|
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.
|Purchase A/c||22,000||Debit all expenses & losses.|
To Cash A/c
|22,000||Real A/c: Credit what goes out.|
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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