There are three sorts of accounts in accounting: Real, Personal, and Nominal.
The term ‘Real Accounts’ refers to all of a company’s assets, whether tangible or intangible.
Things that can be physically touched and felt are referred to be tangible real accounts. Buildings, machinery, stock, land, and other physical real accounts are examples.
Intangible actual accounts are those that can’t be physically touched or felt. Goodwill, patents, trademarks, and other genuine accounts are a few examples.
Personal accounts are divided into three subcategories: Artificial, Natural, and Representative.
Natural personal accounts: The simplest to comprehend of all, this form of personal account contains all of God’s creations with the ability to deal, which, in most situations, are individuals. E.g. Kumar’s A/C, and so on.
Personal accounts that are created artificially by law, such as corporate organisations and institutions, are referred to as artificial personal accounts. For example, private companies, LLCs, clubs, and schools.
Accounts that directly or indirectly represent a certain individual or group are known as representative personal accounts. E.g. If an employee’s wages are paid in advance, a wage prepaid account will be created in the accounting records. This prepaid wages account is a representative personal account that is tied to the person in some way.
Nominal Account
Nominal accounts are accounts that are tied to expenses, losses, earnings, or gains. The dictionary definition of the word “nominal” is “existent in name only,” and this definition holds true in accounting as well. Furthermore, nominal accounts do not exist in physical form, although money is involved in every nominal account.
Purchase A/C, Salary A/C, Sales A/C, Commission A/C, Bad Debt A/C, and so on. All nominal accounts culminate in profit or loss, which is then transferred to the capital account.
