An account is a summarized record of business transactions and account can be classified into 3 types
A. Personal Account
B. Real Accounts
C. Nominal Account
A. Personal Accounts – The accounts which relate to an individual, firm, company are called personal accounts. It can be classified into three categories –
1. Natural Personal account- It refers to the accounts of human beings. For example tom account, Stephen account etc…
2. Artificial Personal account – It refers to accounts that do not have physical existence like accounts of companies for example Microsoft account, Google account etc….
3. Representative Personal account – It refers those account which represents a particular group of persons so prepaid insurance account or unearned commission account are some of its examples.
B. Real Accounts – The accounts of all things whose value can be measured in terms of money are known as real accounts. They are of 2 types
1. Tangible Real account – These are the account of those things which can be touched, felt or measured. Examples of it include stock account, building account, furniture account etc….
2. Intangible Real account – These accounts represents those things which cannot be touched, felt or measured but their value can be measure in terms of money. Goodwill, patent, trademark are some of the examples of intangible account.
C. Nominal Account – Nominal account include the accounts of all expenses and incomes. For example commission earned, rent paid, bad debts, rent received etc…..