BOOK KEEPING FORM ONE - CLASSIFICATION ACCOUNTING [PDF]

CLASSIFICATION OF ACCOUNTS

Classification of Accounts

It is necessary to know the classification of accounts and their treatment in double entry system of accounts. Broadly, the accounts are classified into three categories:

Personal accounts
Impersonal
Real accounts
Tangible accounts
Intangible accounts

Let us go through them each of them one by one.

Difference between Personal and Impersonal Account

Differentiate between personal and impersonal accounts

The differences between personal and impersonal accounts can be seen from what is debited and what is credited. In this concept you are going to learn those differences and investigate how they differ.

There are two types of accounts. Personal account and impersonal accounts, impersonal accounts is further divided in two groups. They are depicted on the image below.

Personal Accounts

Personal accounts deal with accounts relating to individuals, companies, firms and banks. They are further classified into three categories shown below. You will be able to understand them one by one.

Natural Personal Account

An account related to any individual like David, George, Ram, or Shyam is called as a Natural Personal Account.

Artificial Personal Account

An account related to any artificial person like M/s ABC Ltd, M/s General Trading, M/s Reliance Industries, etc., is called as an Artificial Personal Account.

Representative Personal Account

Representative personal account represents a group of account. If there are a number of accounts of similar nature, it is better to group them like salary payable account, rent payable account, insurance prepaid account, interest receivable account, capital account and drawing account, etc.

Example of personal account

BOOK KEEPING FORM ONE – CLASSIFICATION ACCOUNTING

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