Classification of Accounts
(i) Real Accounts: These accounts contain records of transactions in property or materials i.e things you can see physically. Examples are motor vehicle accounts, furniture account, buildings account, machinery account etc.
(ii) Nominal Accounts: These deal with intangible things which may be revenue, losses, expenses, goodwill, profits and discounts.
(iii) Personal Accounts: These are accounts in which transactions with individuals or other organizations are entered. Examples of personal accounts are debtors and creditors accounts.
(iv) Impersonal Accounts: These accounts relate to intangible and material things. It is the one sub-divided into real accounts and nominal accounts.
- Explain the term ‘‘ledger’’.
- List the classes of ledger.