May 29, 2022

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ACCOUNT AND IT’S TYPES

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ACCOUNT AND IT’S TYPES

Account is a page in the ledger that shows a particular that contain a summarized detail of an aspect of transactions.

TYPES OF ACCOUNT

There are majorly two types of account. Personal accounts and impersonal accounts.

PERSONAL ACCOUNTS:

Personal accounts are names of person and entity. A business can have a personal account name for John called John Account (A/C), An entity Nestle Account, Bank account, the owner of the business Capital Account, Drawings Account, Reserves Account, Shares capital Account.

IMPERSONAL ACCOUNT

Impersonal account is an account for non-persons. It is divided into real account, nominal account and intangible account.

(1) REAL ACCOUNT:

Real account is the account for tangible items. This include all physical assets of the entity. Examples are: Land and Building, Furniture and Fittings, Investments in subsidiaries, Investmentb in associates, Motor vehicle account, e.t.c.

(2) NOMINAL ACCOUNT:

READ ON  NEEDS FOR ACCOUNTING INFORMATION

Nominal account is an account for income and expenses. There will find Turnover account, purchases account, electricity bill account, transport expenses account, wages and salary account, e.t.c.

(3) INTANGIBLE ACCOUNT:

Intangible account is the account for transactions that can not be seen or touched. This include: Goodwill account, Copyright account, Trademark account and Patent right account.

Further reading:

IAS 1 General purpose financial statement.

five ways to manage risk in a business.

principles of double entry.

how to differentiate between ATM and personal teller machine.

going concern and financial statement.

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