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 are one of the three types of accounts. This is the good example of real account to real account accounting procedures. According to 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/-.
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 is the great real account example to personal account accounting process. According to the golden rule, Purchaser A/c is debited with Rs.22,000/-, and Retail Store A/c is credited with Rs.22,000/-.
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/-, with the Bank A/c debiting and the Cash A/c crediting. Hope these real account examples were useful for you to understand the concept.
Nominal Account Definition
Accounts associated with income, gains, losses, or expenses are known as Nominal Accounts. At the end, we post the remaining balances of nominal accounts to the capital account.
| 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. 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.
| 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 a/c – a bank account that represents an organization.
- Mrs. Jenny a/c – the account is representing Mrs. Jenny in person.
- Capital a/c – a type of account that represents the owner of a firm, organization or an individual.
- M/s Fintech & Co a/c – Is a company that represents a 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. |
Personal accounts are one of the three types of accounts. According to 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 Cash Account and credit it to Capital Account. This is the real time example of transaction between real account to 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, where Accrued Brokerage Account was debited and Brokerage Account was credited. Hope these personal account examples were useful for you to understand the concept.
Conclusion
Here we have understood the meaning of three types of accounts along with 10 examples of personal account, real account and nominal account. Hope these real account nominal account personal account examples will assist you in your class 11, class 12 and after in your accounting career.
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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
