Nature of Accounts

Students often have a doubt whether they have to debit or credit a particular account while passing a journal entry. This process becomes easy when they know the nature of Account. They can understand it well with the following list (As per Modern Classification and Traditional Classification of accounts):

Nature of Accounts from Business Point of View

  1. Cash/Bank A/c - Asset, Real
  2. Interest on Capital A/c - Nominal
  3. Interest on Drawings A/c - Nominal
  4. Partner’s Capital/Current A/c - Capital, Personal
  5. Profit and Loss Appropriation A/c - Nominal
  6. Revaluation A/c - Nominal
  7. Profit and Loss Suspense A/c - Nominal
  8. Retiring Partner's Loan A/c - Liability, Personal
  9. Deceased Partner's Executor Account - Liability, Personal
  10. Realisation A/c - Nominal
  11. Share Capital A/c - Capital, Personal
  12. Share Application A/c - Liability, Personal
  13. Share Allotment A/c - Asset, Personal
  14. Share First Call A/c - Asset, Personal
  15. Calls in Arrears A/c - Asset, Personal
  16. Discount/loss on Issue of Debentures A/c - Nominal
  17. Securities Premium A/c - Nominal
  18. Premium on redemption of debentures A/c - Liability, Personal
  19. Debentures A/c - Liability, Personal
  20. Interest on Debentures A/c - Nominal
  21. Calls in Advance A/c - Liability, Personal
  22. Dividend A/c - Nominal
  23. Bank A/c - Asset, Real
  24. Tax A/c - Nominal
  25. Provision for Taxation A/c - Liability, Personal
  26. Share Application money pending allotment A/c - Liability, Personal

Examination Guidance