There are two main types of accounts, namely: (1) Personal Accounts and (2) Impersonal Accounts.

A business enterprise has to maintain business relations with other persons or business enterprises. Accounting recording business transactions with persons and other business enterprises are called the personal accounts. Persons to whom the goods have been sold on credit or money lent are called debtors and the persons who have supplies goods on credit or have advanced loans to the business enterprise are called the creditors. Personal accounts, in practice, may be of following types:

(i)  Natural Person(s)’ accounts

such as the accounts of the proprietor, supplier or receivers of goods or money etc., in the name of natural persons such as Sachin’s Account, Ray’s account.

(ii)  Artificial of legal person(s) accounts

such as the accounts of legal entities in the nature of limited companies’ accounts; partnership accounts; accounts of Governments agencies; institutions accounts; clubs accounts.

(iii) Groups or representative personal accounts:

The group or representative personal accounts are the accounts of different persons of the same nature but more than one in number. In the account books, the accounts are opened in the names of individual persons (or parties), natural and legal. The sum due to those employees or worker is aggregated in one common account, the title of which is usually: salaries or wages outstanding account. This account is a personal account representing a group of employees. Some accounts though personal in nature have the features of a real accounts.

Impersonal Accounts

Accounts of business transactions which do not affect persons – natural or artificial – but affect the business enterprise are called the impersonal accounts. These are divided into two classes: (a) Real Accounts and (b) Nominal Accounts.

Real Accounts:

Such accounts consist of the accounts of properties and possessions which are both real, tangible and intangible. (i) Tangible real accounts consisting of real tangible and concrete things or properties which can be seen, touched, felt, measured, purchased and sold. The bank account is not a real account. It is personal account since it is the account of some banking company which, as stated above, is an artificial or legal person. (ii) Intangible real accounts, comprising of such things which cannot be physically felt or touched but are capable of monetary measurement.

Nominal or temporary accounts:

The accounts of expenses and losses, income and gains are called nominal accounts. These accounts cannot be seen or felt and therefore unreal. Hence they are also known as unreal accounts. These accounts are also called temporary accounts because they are transferred to a bigger nominal account namely trading or profit and loss account when final accounts are prepared.

Mixed Accounts

(Nominal Accounts As Personal Accounts)

An account for an outstanding item of expense such as outstanding salary or for an outstanding item of income such as accrued interest is really a personal account because it is an account of some unnamed creditors. The following list of some mixed accounts is useful:

(i)    Rent Account is a Nominal Account, but Outstanding Rent Account is a Personal Account. Rent Received in Advance Account is a Personal Account. Prepaid Rent Account is a Personal Account.
(ii)    Salaries or Wages Account is a Nominal Account but Outstanding Salaries or Outstanding wages Account is a Personal Accounts. Salaries (or wages) paid in Advance Account is a Personal Account.
(iii)    Interest Account is a Nominal Account but Outstanding Interest Account is a Personal Account. Interest Received in Advance Account is a Personal Account. Accrued Interest Receivable Account is a Personal Account.
(iv)    Discount Account is a Nominal Account but discount Received in Advance Account is a Personal Account. Unexpired Discount or Rebate on Bills Discounted Account is a Personal Account.
(v)    Commission Account is a Nominal but Outstanding Commission Account is a Personal Account; Commission Received in Advance Account is also a personal Account.
(vi)    Subscriptions Account is a Nominal Account but Accrued Subscriptions Account or Subscriptions Received in Advance is a Personal Account.
(vii)    Insurance Premium Account is a Nominal Account but Prepaid Insurance is a Personal Account.

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