Wikipedia of Finance - e-learning course on Accounting Wikipedia Chapter - Types of Accounts Real, Personal and Nominal Accounts

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

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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.

AccountsDebit TypeCredit TypeApplied Rules
Furniture A/cReal A/c Debit what’s come in.
To Cash A/c Real A/cCredit 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.

AccountsDebit TypeCredit TypeApplied Rules
Purchaser A/cReal A/c Debit what’s come in.
To Retail Store A/c Personal A/cCredit 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.

AccountsDebit TypeCredit TypeApplied Rules
Cash A/cReal A/c Debit what’s come in.
To Sales A/c Real A/cCredit 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.

AccountsDebit TypeCredit TypeApplied Rules
Bank A/cPersonal A/c Debit the receiver.
To Cash A/c Real A/cCredit 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.

AccountsDebit TypeCredit TypeApplied Rules
Salary A/cNominal A/c  Debit all expenses & losses.
To Cash A/c  Real A/cCredit 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/-.

AccountsDebit TypeCredit TypeApplied Rules
Salary A/cNominal A/c Debit all expenses & losses.
To Salary Outstanding A/c  Personal A/cCredit 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.

AccountsDebit TypeCredit TypeApplied Rules
Drawing A/cPersonal A/c Debit the receiver
To Cash A/c Real A/cCredit 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.

AccountsDebit TypeCredit TypeApplied Rules
Mr. Jain A/cPersonal A/c Debit the receiver
To Cash A/c Real A/cCredit 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.

AccountsDebit TypeCredit TypeApplied Rules
Cash A/cReal A/c Debit what’s come in.
To Capital A/c Personal A/cCredit 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.

AccountsDebit TypeCredit TypeApplied Rules
Accrued Brokerage A/cPersonal A/c Debit the receiver.
Brokerage A/c Nominal A/cCredit 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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