Classification of Account

Q. Show the Classification of Account

The classifications of accounts are shown in the following flowchart

1. Golden (Traditional) Classification

2. Modern Classification

01 Golden Classification of Accounts

Accounts are basically of two types (a) Personal Accountant (b) Impersonal Account

a) Personal Account: Ali account relating to a Person or institution in called a Personal account. We open an account in our Z-1 Ledger for each of the Persons or institutions with whom we deal.

For example: Kamal A/C, Adamjee Jute Mills Limited A/C, etc.

 
The Personal Accounts are divided into two types

(1) Debtors Account and

(2) Creditors Account.

(1) Debtor Account: The Personal accounts from whom the concern or accounting unit is entitled to receive money are called Debtor Account.

(2) Creditor Account: The Personal accounts to whom money is to be paid by the concern or accounting Z17 unit is called Creditor Account.

b) Impersonal Account: An account which does not relate to any Personal or institution, but rather to a property, income or an expenditure is called  impersonal account, We open an a account in our Ledger for each item of our properties, incomes and expenses, For example, Machinery A/c, Salary A/c, commission Received A/c, etc. etc.

Impersonal accounts again are of two types

(a) Real or Property Account, and

(b) Nominal or proprietary account

(a) Real or Property Account: An account relating to a property is called a real or property account. We open ail account in our Ledger for each item of our properties-moveable or  
immoveable. For example, Buildings A/c, Furniture A/c, etc.

(b) Nominal or Proprietary Account: An account relating to an income or expenditure is called a nominal or proprietary account. We open an account in our Ledger for each item of our incomes and expenses. For example: Wages A/C, Discount Received A/C, etc.

These accounts are called nominal because they ultimately lose their entity. Again, they are called 'proprietary' because they are, used in the calculation of the proprietor's profit or loss.