Classification of Accounts

Accounts recording transactions regarding individuals or companies or firm are often called private accounts. Personal accounts may perhaps further more be classified as :

(1) Organic person's personalized accounts: The accounts recording transactions regarding particular person human beings e.g., Anand's A/c, Remesh's A/c, Pankaj's A/c are classified as all-natural person's particular accounts.

(two) Artificial person's individual account: The accounts recording transactions concerning constrained firms. bank, company, establishment, visit us. and so forth. e.g. Delhi Cloth Mill; Hans Raj College or university; Gymkhana Club are categorized as artificial persons' personalized accounts.

(three) Consultant private accounts: The accounts recording transactions regarding the expenditures and incomes are categorised as nominal accounts. But in selected cases a result of the matching thought of accounting the quantity, on the unique date, is payable to the folks or recoverable from people today.

Such amount (a) relates to the actual head of expenditure or income and (b) signifies people to whom itis payable or from whom it really is recoverable. These types of accounts are classified as consultant particular accounts e.g. "Wages Remarkable Account", Pre-paid Insurance Account. and many others.

Genuine Accounts

The accounts recording transactions relating to tangible things (that may be touched, bought and bought) these as products, funds, making. machinery etcetera., are categorized as tangible serious accounts.

While the accounts recording transactions relating to. intangible items (which never have bodily form) these types of as goodwill, patents and copy rights. trade marks etcetera., are categorized as intangible actual accounts.

Nominal Accounts

The accounts recording transactions concerning the losses, gains. bills and incomes e.g., Rent, salaries, wages, fee, desire, negative money owed and many others. are labeled as nominal accounts. As already talked over, anywhere a nominal account signifies the amount payable to or receivable from specific individuals it is called agent particular account.

Procedures of Debit and Credit history (classification dependent)

1. Private Accounts: Debit the receiver, Credit history the giver (provider)

2. Actual Accounts: Debit what will come in, Credit what goes out

3. Nominal Accounts: Debit bills and losses, Credit history incomes and gains.,

Hints for Journalizing

The subsequent discussion may help in diagnosing the transaction by using a watch to see which accounts are relevant for passing the journal entry.

one. Remedy of cash/credit transaction.

Go through cautiously the subsequent transactions:

(i) Bought goods for Rs. 1,200 cash. . (ii) Ordered goods for Rs. one,200. (iii) Procured merchandise for Rs. one,two hundred from Arun. (iv) Purchased merchandise for Rs. one,200 from Arun on funds.

Transaction (i) and (iv) are clear since it has long been specially said that purchases are actually created on funds. Thus the entry is :