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Whenever accounts are considered it is important that certain classifications be understood to ensure that there is no discrepancy in regards to their understanding. It is very important that these core concepts are clarified before students for best understanding of this subject.

Classification of accounts

Types of Accounts:

Personal Account:

Since a firm deals with a number of people on a daily basis, these are accounts that are specifically related to a person or persons.

Various formats of this account:

  1. Representative Person’s Account that includes prepaid expenses accounts as well as salaries outstanding accounts.
  2. Artificial Person’s Accounts implies bank account as well as company accounts.
  3. Natural Person’s Account implies a single individual.

Impersonal Account:

These accounts are specifically related to property and other capital goods.

Its formats:

  1. Nominal Accounts are those that deal with a particular’s business’s financial transactions such as loss gain, and expenses. It also includes wage, commission and discount account.
  2. Property Accounts are those that specifically deal with properties or assets such as cash accounts, and heavy industrial plants. Depending on the class each account is prepared.