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Difference among personal or real account or nominal account

What is the difference among personal or real account and nominal account?

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The total business transactions are classified into three. They are as illustrated:

• Transactions associated to persons
• Transactions associated to Things
• Transactions associated to incomes and expenditures 

In accountancy we have three kinds of accounts they are: personal, real and nominal.

The personal account refers to all the transactions associated to the natural persons, artificial persons and representative person’s example: Rama, Ravi, XYZ bank, outstanding rent.

A) First category of transactions fits in to the personal accounts

Rule: A real account comprises things in the business that is possessions.

Debit the receiver and then credit the provider.

B) Second category of transactions associated to: Real accounts example: machinery, buildings, cash and so on.

Rule: Debit that comes in and credit and what goes out

C) The Nominal accounts comprise all the transactions associated to the expenditures, incomes, losses and gains. Example: rent received, rent paid, bad debts, and gain on sale of an asset.

Rule: Debit of all expenses and losses and credit all incomes and gains.

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