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Types of Accounts-Real,Personal,Nominal | Three Golden Rules of Accounting | Journal Entries | Class 11 Video Lecture
FAQs on Types of Accounts-Real,Personal,Nominal - Three Golden Rules of Accounting - Journal Entries - Class 11 Video Lecture
| 1. What are the three types of accounts in accounting? |  |
Ans. The three types of accounts in accounting are as follows:
- Real accounts: Real accounts involve tangible assets, such as buildings, machinery, inventory, and cash. These accounts are permanent and are not closed at the end of the accounting year.
- Personal accounts: Personal accounts are related to individuals, firms, or organizations. They include accounts of customers, suppliers, creditors, debtors, etc. These accounts can be further classified as natural persons, artificial persons, and representative persons.
- Nominal accounts: Nominal accounts are related to revenues, expenses, gains, and losses. They represent the income and expenses incurred by a business during a particular accounting period. These accounts are closed at the end of the accounting year.
| 2. What are the three golden rules of accounting? | |
Ans. The three golden rules of accounting are as follows:
- Debit what comes in, credit what goes out: This rule applies to real and personal accounts. When an asset or an expense increases, it is debited, and when it decreases, it is credited. Similarly, when a liability or income increases, it is credited, and when it decreases, it is debited.
- Debit all expenses and losses, credit all incomes and gains: This rule applies to nominal accounts. Expenses and losses are debited as they decrease the net profit, while incomes and gains are credited as they increase the net profit.
- Debit the receiver, credit the giver: This rule applies to personal accounts. When an individual or an organization receives something, it is debited, and when they give something, it is credited.
| 3. What are journal entries in accounting? | |
Ans. Journal entries in accounting are the first step in the bookkeeping process. They are used to record financial transactions in chronological order. A journal entry consists of the date of the transaction, the accounts affected, the amount of the debit or credit, and a brief description of the transaction. These entries are then posted to the respective ledger accounts to maintain a complete and systematic record of all financial activities.
| 4. What is the purpose of maintaining different types of accounts in accounting? | |
Ans. The purpose of maintaining different types of accounts in accounting is to classify and organize financial transactions for better analysis and reporting. Real accounts help in tracking tangible assets and their values, personal accounts aid in keeping records of individuals or organizations with whom the business has financial transactions, and nominal accounts assist in calculating the net profit or loss incurred by the business during a specific period. Each type of account serves a specific purpose and contributes to the overall financial management of a business.
| 5. What is the significance of the three golden rules of accounting? | |
Ans. The three golden rules of accounting are significant because they provide a standardized and systematic approach to record financial transactions accurately. These rules ensure that every transaction is properly classified and recorded in the appropriate accounts, maintaining the fundamental principles of accounting. Following these rules helps in maintaining the balance in the accounting equation and enables businesses to generate accurate financial statements, assess their financial position, and make informed decisions based on reliable financial information.
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Jan 01, 2025 Last updated |
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