Types of Accounts under Golden Rules of Accounting - Explained with Animated Examples

The golden rules of Accounting are the basis of recording all day to day financial business transaction. In which book we record all these transactions is known as Journal Book. The Journal book is maintained in chronological order (i.e. Date wise). To understand the Golden rules of account, first, we have to know the type of accounts because rules are applied to the transaction on the basis of the type of account.

Type of Accounts: –
According to the golden rules of accounting, accounts are divided into three categories. These are explained with the examples as following: –

Real Accounts:
The real account is a ledger account relating to all assets of the business enterprise. This rule is applicable to the following business transactions: –

Purchase of assets,
Sale of assets,
Depreciation charged on the assets, and
Dispose of an asset.
Now to apply this rule, we have to know the meaning of assets.

The asset is that valuable thing or property which the business owns and gets the benefits from it in the future or uses it in generating income.

The example of assets on which the Real Account is applicable:-

Land and Building,
Furniture
Plant and Machine
Vehicles
Cash
Trademarks
Copyright
The list is very long, you will know all of them after completing this full tutorial.

“Click here to check out the types of assets.”

Personal Accounts:
This rule is applicable to all individuals. The individuals are three types shown as following: –

Persons: – Natural Person.
Artificial persons: – The person created by humans.
Representative persons: – Those accounts which represent the person or group of persons.
Example of accounts on which the Personal Account is applicable: –

Examples of Persons: – Amanpreet, Jazz, Pawan Kumar, Vijay, Amir Khan. Etc.
Examples of Artificial persons: – Ram And Sons., HAPPSS Store., Bank A/c (SBI), Reliance Industries Ltd. Etc.
Examples of Representative persons: – Outstanding Salary, Prepaid Expenses, Accrued Income, Pre- received Income, Etc.
Nominal Accounts:
The accounts which are related to the expenses, income, losses, and gains are included in the nominal account.

Example of all accounts on which the Nominal Account is applicable:-

Expenses Accounts: –Salary, Wages, Purchases, Electricity bill, Telephone, and mobile Rent, Transportation charges, Rent Paid, Etc.
Incomes Accounts: – Sales, Commission Received, Rent on sublet building received, Etc.
Losses Accounts: – Loss on sale of an asset, Loss by Theft, Loss by fire, loss by an accident, Etc.
Profits Accounts: – Profit on sale of an asset, Etc.

Type of Accounts: –
According to the golden rules of accounting, accounts are divided into three categories. These are explained with the examples as following: –

Real Accounts
Personal Accounts
Nominal Accounts.

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