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:
- “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.
- “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.