Types of Accounts in Balance Sheet

There are three types of accounts in accounting – Real, Personal, and Nominal accounts. However, in the balance sheet, only two types of accounts are shown, which are as follows:

Real and Personal Accounts

The balance sheet is a statement of assets and liabilities of an organization. It is divided into two main sections – assets and liabilities. The accounts shown in the balance sheet are of two types:

1. Real Accounts: These accounts represent tangible and intangible assets of the organization. They are shown on the asset side of the balance sheet. Examples of real accounts are land, buildings, machinery, patents, trademarks, etc.

2. Personal Accounts: These accounts represent persons, firms, or institutions with whom the organization has transactions. They are shown on the liability side of the balance sheet. Examples of personal accounts are accounts payable, loans payable, salaries payable, etc.

Nominal accounts are not shown in the balance sheet because they are related to the income and expenses of the organization, which are shown in the income statement.

Conclusion

In conclusion, the balance sheet shows only two types of accounts, which are real and personal accounts. Real accounts represent assets, and personal accounts represent liabilities. Nominal accounts are not shown in the balance sheet because they are related to the income and expenses of the organization, which are shown in the income statement.