Concepts of account and types of account

MEANING OF ACCOUNT
An account is a summary of the relevant transaction at one place relating to a particular head. It records not only the amount of transaction but effect also.

CLASSIFICATION OF ACCOUNT

The classification of account according to the Traditional Approach is given below

TYPES OF ACCOUNT
a. PERSONAL ACCOUNT

1. Natural person 2. Artificial person 3. Representative personal account


b. IMPERSONAL ACCOUNT
1. Real Account 2. Nominal Account


a. Personal Account- These accounts relate to natural person, artificial person
And representative person.

Natural person means all human beings like – Rams a/c, Shyams a/c

Artificial person – means a person who is not human beings but act as a human beings like- bank name, college name, and organizational name.

Representative person mans to represents particular group like- outstanding salary, prepaid rent


b. IMPERSONAL ACCOUNT

1. Real Account- means those account which has a monetary value or it can be measured in terms of money like all assets, or example- land, plant and machinery, cash in hand etc.

2. Nominal Account- means all expenses and losses, and al income and profit account are coming in Nominal Account. For example wages paid, salary paid tax paid etc.

RULES OF DEBIT AND CREDIT
I. Personal Account
Debit the Receiver
Credit the giver
II. Real Account
Debit what comes in
Credit what goes out
III. Nominal Account
Debit all expenses and losses
Credit all income and profit
Meaning of Accounting-

Traditional Definition
Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transaction and events which are, in part at least, of a financial character, and interpreting the results there of.AICPA

Modern Definition

The dimension of accounting is much broader than that described above. A widely accepted definition of accounting is given by the American Accounting Association in 1966 which treated accounting as the process of identifying, measuring and communicating economic information to permit informed judgments and decision by the users of accounting information.AAA1966

Meaning of Accountancy
Accountancy refers to systematic knowledge of accounting. It explains how and why all accounting transaction is recorded. It also tells us in what way the accounting information communicate to interested parties.

Meaning of Book Keeping- It is mainly concerned with record keeping of books of accounts. The maintenance of books of account includes the following four activities.
i. Identifying the transactions of financial nature from amongst the various transactions
ii. Measuring the identified transactions in terms of money
iii. Recording the identified transactions in the books of original entry