Classification of accounts heads

Hi,

There are 2 type of classification

1) TRADITIONAL CLASSIFICATION OF ACCOUNTS :

The three types of accounts maintained for transactions with parties are as follows.

Real Accounts:

They are the accounts of all assets used in the business or belonging to the business
Personal Accounts:

They are the accounts of the all natural and artificial persons.
Nominal Accounts:

They are the accounts of the all income and expenses and gains and losses suffered in business.
Illustration 1.
1) Mr. Bachan started a business with a cash Rs.9,00,000/-.
2) He purchased an asset for Rs. 3,00,000/- by cash.
3) He brought in to business furniture (personal assets) worth Rs.5,00,000/-.
4) He purchased goods worth Rs. 75,000/- cash.
5) He opened bank a/c with S B I by depositing cash of Rs.1,00,000/-.
6) During the month he paid a) salary Rs. 50000/-. b) Transportation Rs. 75,000/-.
7) He sold goods worth Rs.50000/- at Rs. 90,000/-.

Solution:-

2) MODERN CLASSIFICATION :

Accounting Equation

There are two accounting equations as follows

Assets= capital + liabilities

Income = Expenses +Profit (profit & loss A/c equation)

Concept of Debit, Credit and Duality:

Illustration 2

Business started with cash of Rs.8,00,000/-
Deposited Rs.5,00,000/- in UTI Bank A/C.
Purchased Plant and Machinery worth Rs.2,50,000/- from ABC & Co. By making immediate payment of Rs.50,000/-in cash.
Purchased goods worth Rs. 30,000/- for cash and Rs 55,000/- on credit from Ram Traders.
Issued a cheque for Rs. 2,00,000/- to ABC & Co. towards the purchase of plants and machinery.
Goods sold for cash Rs.80,000/- (cost goods Rs. 50,000/-).
Proprietor withdrew Rs.20,000/- cash for personal use
Paid Rs. 3,000/- by cheque towards insurance
Paid salary of Rs.7,500/- in cash.
Purchased furniture worth Rs.20,000/- in cash.
Took a loan of Rs. 20,000/- from bank.

Solution:-