List and explain basic types of accounts

Account is divided in following three types:

1.       Personal account

2.       Real account

3.       Nominal account

1.       Personal account: Any individual person or any firms or any company or a bank is considered in a personal account.

Rule for Personal account is: Debit the receiver and credit the giver. 

2.       Real account: Account of any physical things. The cash account or goods account are examples of real account.

Rules for Real account is: Debit what comes in and credit what goes out. 

3.       Nominal account:  Account of any invisible things that means that things are in terms of cash. For example: insurance account, rent account etc.

Rules for Nominal account is: Debit all expenses and losses Credit all incomes and gains.