Account 1 Marks Question

These are the accounts which are in name only and which do not really exist such as the accounts of all expenses and incomes.

When an account represents a particular person or group of persons, it is termed as a representative personal account. For example, 'Outstanding Rent Account'.

The accounts of all those things whose value can be measured in terms of money and which are the properties of the business are termed as Real Accounts such as Cash Account, Furniture Account etc.

1. Personal Accounts.
2. Real Accounts.
3. Nominal Accounts.

Accounts of 'Natural Persons' means the accounts of human beings. For example, Mohan's Account.

Debit the expenses and losses and Credit incomes and gains.

Debit the receiver and Credit the giver.

Debit what comes in and Credit what goes out.

These accounts do not have physical existence as human beings but they work as personal accounts. For example, any Firm's account.

Double entry system refers to a system of accounting in which every transaction affects atleast two accounts simultaneously. One of them is debited and other is credited.

The accounts which relate to an individual, firm, company or an institution are called personal accounts.

Personal Account: The accounts which relate to an individual, firm, company or an institution are called personal accounts. Account of Mohan, Account of Ram Chander Krishan Chander, Account of D.C.M. Limited, Account of Delhi University, Bank Account, Capital Account of the proprietor, Drawings Account of the proprietor etc. are examples of Personal Accounts. Real Account: The accounts of all those things whose value can be measured in terms of money and which are the properties of the business are termed a: Real Accounts. Such as, Cash Account, Furniture Account, Machinery Account Building Account, Goodwill Account etc. Nominal Acccount: These accounts include the accounts of all expenses and incomes. The examples of nominal accounts relating to expenses are Salaries paid, Rent paid, Discount allowed, Bad Debts etc. The examples of nominal accounts relating to incomes are Commission received, Interest received, Discount received etc.

1. Personal Accounts: Accounts which relate to persons, i.e., individuals, firies, companies, debtors or creditors, etc., are Personal Accounts. Examples of Personal Accounts are the account of Ram & Co., a customer (Debtor), or the account of Jhaveri & Co., a supplier of goods (Creditor), Capital Account and Drawings Account of the proprietor. The main purpose of preparing a Personal Account is to determine the balance due to or due from persons or organisations.

Rule of Debit and Credit - Debit the receiver, Credit the giver.

2. Real Accounts: Real Accounts are the accounts which relate to tangible or intangible assets of the firm (excluding debtors). Examples of tangible assets are: land, building, investments, plant and machinery, stock or cash in hand. Examples of intangible assets are: goodwill, patents and trademarks.

Rule of Debit and Credit-Debit what comes in, Credit what goes out.

3. Nominal (Revenue or Expense) Accounts: Accounts which relate to expenses, losses, gains, revenue, etc., are termed as Nominal Accounts. These are Salary Account, Purchases Account, Interest Paid Account, Sales Account and Commission Received Account. The net result of all the Nominal Accounts is profit or loss which is transferred to the Capital Account.

Rule of Debit and Credit-Debit all expenses and losses, Credit all incomes and gains.

Personal Accounts can be classified into three categories:

1. Natural Personal Accounts: The term 'Natural Persons' means persons who are creations of God. Therefore, these will include accounts in individual name. For example, Ram's Account, Asha's Account, etc.
2. Artificial Personal Accounts: These accounts include accounts of corporate bodies or institutions which are recognised as persons in business dealings. For exampe, the account of a limited company, the account of a club or a cooperative society, etc.
3. Representative Personal Accounts: These are accounts which represent a certain person or a group of persons. For example, if rent is due to the landlord, in Outstanding Rent Account will be opened in the books. The Outstanding Rent Account represents the amount of rent payable to the landlord. Other examples of the Representative Personal Accounts are Prepaid Rent Account, Accrued Commission Account, Unearned Interest Account, etc.

These accounts represent such things which cannot be touched, but, of course, their value can be measured in terms of money.
Examples: Goodwill account, Patents account, Trade Marks account, Copyrights account etc.

Representative Personal Accounts: These are accounts which represent a certain person or a group of persons. For example, if rent is due to the landlord, in Outstanding Rent Account will be opened in the books. The Outstanding Rent Account represents the amount of rent payable to the landlord. Other examples of the Representative Personal Accounts are Prepaid Rent Account, Accrued Commission Account, Unearned Interest Account, etc.

Yes because in every transaction credit and debit both are equal.
For example - rajesh bought a pen of ₹ 50.
He get a pen in return of cash.
So purchases is debited and cash is credited as he recieves pen and the debit is the receiver and cash is credited as credit is the giver and he gives cash.

1. Scientific System: Double Entry System is a scientific system of recording business transactions as compared to other systems of Book Keeping. It helps attain the objectives of accounting.
2. Complete Record of Transactions: Under the system, both sides of a transaction are recorded. It is a complete record as it results in showing correct income or loss, assets and liabilities.
3. Arithmetical Accuracy of Accounts is Ensured: By the use of this system, arithmetical accuracy of the accounting work can be established through the Trial Balance.
4. Determining Profit or Loss: Profit earned or loss incurred during a period can be determined by preparing Profit and Loss Account.
5. Knowledge of Financial Position: Financial position of the firm or the institution can be ascertained at the end of each period by preparing the Balance Sheet.