| Accounts are broadly classified into two (2) category namely: Personal Accounts and Impersonal Accounts ( see earlier article).
For Impersonal accounts, they can be sub-divided into (a) Real Accounts & (b) Nominal Accounts.
Below explain:
Real Accounts:
Related to assets or properties which are either:
- Tangible real accounts-assets that can be touched, felt, measured, purchased and sold. Examples like land, building, furniture, stocks, cash accounts
- Intangible real accounts-assets which have no physical existence but can be measured in monetary terms. For example, goodwill, patent rights, trade marks
Nominal Accounts:
- Relates to all expenses, losses, incomes and gains. For examples interest received, wages, salaries, rent & postage. Appear in the Income Statement. In ledgers, separate account is opened for each of the item.
- Nominal accounts are also called temporary accounts because they are ultimately taken up into the Income Statement..
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