Types of Accounts: Real, Personal and Nominal Accounts with Examples

There are rules under types of accounts which simply the accounting process. Firstly, understand the real account examples, meaning of real account, mix examples of personal account and real account along with mix example of nominal account and real account. Secondly, we will understand nominal account examples, meaning of nominal account, combination example of personal account and nominal account along with combination example of real account and nominal account. Thirdly, we will understand personal account examples, meaning of personal account, combination example of real account and personal account along with combination example of nominal account and personal account.

The three golden rules of accounting refer to the credit and debit rules of accounting. They also go by the name of three types of accounts in accounting. Here we will see types of accounts with examples of real account, examples of nominal account as well as examples of personal account. Let us understand further in detail:

Types of Accounts with Examples

Real Account, Nominal Account, and Personal Account are the three types of accounts. We will understand in detail along with examples of personal real and nominal account.

Real Account Definition

Real Accounts encompass any type of assets, whether tangible (such as land, stocks, buildings, etc.) or intangible (for example, goodwill, copyrights, patents, etc.).

First Golden Rule – Real Accounts

Debit what’s come in and Credit what goes out.

Accounts that reflect the physical characteristics of a situation are as follows:

• The Goods / Stock Account represents physically existent of stock.
• Machinery Account – a representation of tangible machinery.
• Cash Account – a bank account that represents cash that is physically present.

Examples of Real Accounts

Lets take few from the top examples of real account to understand the concept in much better way.

Real Account Example

Mr. Joe purchased furniture of Rs.75,000/- for cash.

Accounts	Debit Type	Credit Type	Applied Rules
Furniture A/c	Real A/c		Debit what’s come in.
To Cash A/c		Real A/c	Credit what goes out.

Real accounts represent one of the three fundamental types of accounts. Specifically, they exemplify real account to real account accounting procedures. In line with the first golden rule of Real Accounts, Furniture A/c is debited with Rs.75,000/-, while Cash A/c is credited with Rs.75,000/-.

Examples of Real Account

Purchased goods from retail store for Rs.22,000/- for credit.

Accounts	Debit Type	Credit Type	Applied Rules
Purchaser A/c	Real A/c		Debit what’s come in.
To Retail Store A/c		Personal A/c	Credit the giver.

This serves as an excellent real account example transitioning to the personal account accounting process. Following the golden rule, Purchaser A/c is debited with Rs.22,000/-, while Retail Store A/c is credited with Rs.22,000/-. This illustrates the fundamental principle of double-entry bookkeeping.

Real Account Examples

The seller sold goods for Rs. 5,000/- in cash.

Accounts	Debit Type	Credit Type	Applied Rules
Cash A/c	Real A/c		Debit what’s come in.
To Sales A/c		Real A/c	Credit what goes out.

In this transaction, Rs.5,000/- will be debited from Cash A/c and credited to Sales A/c. This is the real time example of transaction between real account to real account.

Best Example of Real Account

I made a deposit of Rs.7,500/- cash in my bank account.

Accounts	Debit Type	Credit Type	Applied Rules
Bank A/c	Personal A/c		Debit the receiver.
To Cash A/c		Real A/c	Credit what goes out.

In this transaction, the personal account and real account exchanged Rs. 7,500/-. The Bank A/c debited while the Cash A/c was credited. Hopefully, these examples of real accounts have been helpful in grasping the concept.

Nominal Account Definition

Accounts associated with income, gains, losses, or expenses, commonly referred to as Nominal Accounts, are pivotal in financial records. Subsequently, the remaining balances of these accounts are posted to the capital account upon closure.

Second Golden Rule – Nominal Accounts

Debit all expenses & losses and Credit all income’s & gain’s

Accounts that reflect the no monetary value are as follows:

• The Interest Received Account represents income earned from interest.
• Salaries account – a general ledger account that represents expenses on account of salaries.
• The account for Profit on sale of assets – represents the sale of assets, which is a gain.
• The account for loss on sale of assets – represents the sale of assets, which is a loss.

Examples of Nominal Accounts

Here are few from the top 20 examples of nominal account to understand in depth.

Nominal Account Example

Someone paid Mr. Shah a salary (wages) of Rs. 28,000/- in cash.

Accounts	Debit Type	Credit Type	Applied Rules
Salary A/c	Nominal A/c		Debit all expenses & losses.
To Cash A/c		Real A/c	Credit what goes out.

Nominal accounts are one of the three types of accounts. This is the best example of nominal account to real account. According to the golden rule, we debit the Salary A/c with Rs. 28,000/- and credit the Cash A/c with Rs. 28,000/-.

Example of Nominal Account

Mr. Joseph is to be paid outstanding wages of Rs. 52,000/-.

Accounts	Debit Type	Credit Type	Applied Rules
Salary A/c	Nominal A/c		Debit all expenses & losses.
To Salary Outstanding A/c		Personal A/c	Credit the giver

This is one of the good example of nominal account to personal account accounting method. According to the golden rule, Salary A/c is debited with Rs. 52,000/-, and Salary Outstanding A/c is credited with Rs. 52,000/-.

Personal Account Definition

Personal accounts are known as accounts that are either directly or indirectly related to individuals, companies, firms, or organizations. Examples of personal accounts encompass a variety of categories, such as the Kumar Account, Xyz Pvt. Ltd. account, capital account, prepaid account, bank account, drawings account, creditors account, outstanding account, debtors account, suppliers account, and more.

Third Golden Rule – Personal Accounts

Debit the receiver and Credit the giver

Accounts that reflect the account used for personal reasons are as follows:

• Bank accounts represent organizations.
• Mrs. Jenny’s account personally represents her.
• Capital accounts represent the owners of firms, organizations, or individuals.
• M/s Fintech & Co’s account represents the corporation M/s Fintech & Co.

Examples of Personal Accounts

Let us understand the concept in depth with few from the top examples of personal account.

Personal Account Example

I took out cash of Rs.45,000/- from my bank account for personal use.

Accounts	Debit Type	Credit Type	Applied Rules
Drawing A/c	Personal A/c		Debit the receiver
To Cash A/c		Real A/c	Credit what goes out.

One of the three types of accounts is the personal account. Following the golden rule, we debit the Drawing Account with Rs. 45,000/- and credit the Cash Account with Rs. 45,000/-.

Example of Personal Account

Someone paid Mr. Jain Rs. 35,000/- in cash.

Accounts	Debit Type	Credit Type	Applied Rules
Mr. Jain A/c	Personal A/c		Debit the receiver
To Cash A/c		Real A/c	Credit what goes out.

This is one of the great personal account examples to real account accounting procedure. According to the golden rule, we debit Mr. Jain’s Account with Rs. 35,000/- and credit the Cash Account with Rs. 35,000/-.

Personal Account Examples

Mr. Pankaj started his firm with a cash investment of Rs.85,750.

Accounts	Debit Type	Credit Type	Applied Rules
Cash A/c	Real A/c		Debit what’s come in.
To Capital A/c		Personal A/c	Credit the giver.

In this case, we will debit Rs. 85,750/- from the Cash Account and credit it to the Capital Account. This transaction serves as a real-time illustration of the transfer from a real account to a personal account.

Best Example of Personal Account

The brokerage earned a sum of Rs. 9,500/- but did not receive it.

Accounts	Debit Type	Credit Type	Applied Rules
Accrued Brokerage A/c	Personal A/c		Debit the receiver.
Brokerage A/c		Nominal A/c	Credit all income’s & gain’s.

In this transaction, a transfer of Rs. 9,500/- occurred between a personal account and a nominal account. Specifically, the Accrued Brokerage Account was debited, while the Brokerage Account was credited. Consequently, these personal account examples provide useful illustrations to aid in grasping the concept.

Conclusion

Now that we have elucidated the meanings of three types of accounts, let’s delve into 10 examples each of personal, real, and nominal accounts. These illustrations of real, nominal, and personal accounts are designed to aid your comprehension, not only during your class 11 and class 12 studies but also throughout your accounting career.

Read E-Learning Tutorial Courses - 100% Free for All