Types of Accounts

Step 1: Begin the class by choosing three volunteers in the class.

Step 2: Name the first volunteer “Names”

Step 3: Name the second volunteer “Tangible”: this includes things around you that you can see

Step 4: Name the third volunteer “Intangible”: this will include things that we cannot see.

Step 5: Ask the remaining seated students to each make a chit writing any of the objects that fall in the above three categories: foreg: Ram, Mohan, Salary, Loss, rent, Chair, School Fees, Table etc.

Step 6: You (Teacher) read out the chits one by one and ask the students to stand up who wrote the chit and stand with the category it belongs to.

Step 7: You will get a fair segregation of three categories.

These three categories are nothing but the three types of accounts as follows:

  1. “Names Category” or Personal Account: The elements or accounts which represent persons and organisations.
  • Mrs. Vimla a/c – representing Mrs. Vimla a person.
  • M/s Bharat & Co a/c – representing M/s Bharat & Co, an organisation.
  • Capital a/c – representing the owner of the business, a person or organisation.
  • Bank a/c – representing Bank, an organisation.

2. “Tangibles” or Real Accounts

The elements or accounts which represent tangible aspects.

  • Cash a/c – representing cash which is tangible.
  • Goods/Stock a/c – representing Stock which is tangible.
  • Furniture a/c – representing Furniture which is tangible.
  1. “Intangible Category” or Nominal Accounts

The elements or accounts which represent expenses, losses, incomes, gains.

  • Salaries a/c – representing expenditure on account of salaries, an expense.
  • Interest received a/c – representing income on account of interest, an income.
  • Loss on sale of Asset a/c – representing the loss incurred on sale of assets, a loss.