Tag: meaning and classification of accounts

Questions Related to meaning and classification of accounts

The effect opening entry is the opening of _______________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Personal Accounts and Real Accounts

  2. Real Accounts and Nominal Accounts

  3. Personal Account and Nominal Accounts

  4. Personal Account, Real Account and Nominal Accounts.

Show answer
Correct Option: A
Explanation:

The effect of opening entries is opening of real and personal accounts as these are the types of account which are left with closing balance at the end of the year. 

The closing balance of previous year is transferred to the next year as opening balance. 

Loan from Mahesh Account is _______________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Personal A/c

  2. Real A/c

  3. Nominal A/c

  4. None of these

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Correct Option: A

Bank loan account is a _________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Personal account

  2. Real account

  3. Nominal account

  4. Individual Account

Show answer
Correct Option: A
Explanation:

There are mainly three types of accounts: Real, Personal, and Nominal. Personal accounts are classified into three subcategories: Artificial, Natural, and Representative.

The accounts related to real persons and organizations are classified as personal accounts. Examples of personal accounts include John's account, Peter's account, Procter and Gamble's account, Vibrant Marketing Agency's and City Bank's account etc. The business keeps a separate account for each individual and organization for the purpose of ascertaining the balance due from or due to them. Hence, bank loan account is a personal account.

Rent paid in advance is a ____________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Personal account

  2. Real account

  3. Nominal account

  4. None of above

Show answer
Correct Option: A
Explanation:

Personal accounts are related to individuals, firms, companies, etc. A few examples of personal accounts include debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, capital, drawings, etc. 

Prepaid expenses are those expenses which have been paid in advance and related benefits are not consumed within the same accounting period. The benefits of expenses incurred are carried to the next accounting period. Examples - prepaid salary, prepaid rent, etc Prepaid expenses are recorded in the books at the end of an accounting period to show true numbers of a business. Prepaid (unexpired) expense is a personal account and is shown on the Assets side of a balance sheet.

Which of the following is nominal account ?

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Bills payable

  2. Bills receivable

  3. Debtors

  4. Stationary

Show answer
Correct Option: D
Explanation:

Nominal accounts in accounting are the temporary accounts, such as the income statement accounts. In other words, nominal accounts are the accounts that report revenues, expenses, gains, and losses. They are closed at the end of each accounting year. This means that their account balances are transferred to a permanent account. This closing process allows the nominal accounts to start the next accounting year with zero balances. 

Stationary is classified as a nominal account, as it is an expense.

Outstanding expenses is a _________ account.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Real

  2. Personal

  3. Nominal

  4. None of them

Show answer
Correct Option: B
Explanation:

Accounts recording transactions with a person or group of persons are known as personal accounts. These accounts are necessary, in particular, to record credit transactions. Personal accounts are of the following types:


1. Natural persons: An account recording transactions with an individual is termed as a natural persons' personal account.


2. Artificial or legal persons: An account recording financial transactions with an artificial person created by law or otherwise is termed as an artificial persons' personal account. 

3. Representative personal accounts: An account indirectly representing a person or persons is known as representative personal account. When accounts are of similar nature and their number is large, it is better to group them under one head and open a representative personal account.

Outstanding expenses is the representative personal account because it represents the outstanding expenses to a group pf people. Hence, it can be classified as a personal account. 

Bank account is a Nominal account.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. True

  2. False

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Correct Option: B
Explanation:

Accounts recording transactions with a person or group of persons are known as personal account. These accounts are necessary, in particular, to record credit transactions. Personal accounts are of the following types:


1. Natural persons: An account recording transactions with an individual is termed as natural persons' personal account.


2. Artificial or legal persons: An account recording financial transactions with an artificial person created by law or otherwise is termed as  an artificial persons; personal account. 

3. Representative personal accounts: An account indirectly representing a person or persons is known as representative personal account. When accounts are of a similar nature and their number er is large, it is better to fed up them under one head  and open a representative personal account.

Bank account is an example of personal account and not nominal account. All the accounts related to an individual, a firm or a company are termed as  a personal accounts. Hence, bank account is an example of a personal account.

Real accounts can take the form of ___________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Tangible real account like land account, building account, furniture account, cash account

  2. Intangible real account like goodwill account, trade marks account, patent rights account

  3. Natural person's accounts like proprietor's account, suppliers account, receiver's account

  4. Either (a) or (b)

Show answer
Correct Option: D
Explanation:

Accounts relating to properties or assets are known as "Real Accounts". A separate account is maintained for each asset e.g. Cash, Machinery, Building, etc. Real accounts can be further classified into tangible or intangible.

1. Tangible real accounts: These accounts represent assets and properties which can be seen, touched, felt, measured, purchased and sold. For e.g. Cash account, Furniture account, etc.
2. Intangible real accounts: These accounts represent assets and properties which cannot be seen, touched or felt but they can be measured in terms of money. For e.g. Goodwill account, Patents account, Copyright account, etc.

Kamal's account, Mala's account, Sharma's accounts are example of _____________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Artificial or legal persons personal account

  2. Natural persons personal account

  3. Representative personal accounts

  4. Any of the above

Show answer
Correct Option: B
Explanation:

Accounts recording transactions with a person or group of persons are known as personal account. These accounts are necessary, in particular, to record credit transactions. Natural, Artificial and Representative are various types of personal accounts.

Natural personal accounts is an account recording transactions with an individual. For e.g. Kamal's account, Mala's account, Sharma's account. Both males and females are included in it.

Which of the following types of accounts represent assets and properties which can be seen, touched, felt, measured, purchased and sold?

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Tangible real accounts

  2. Intangible real accounts

  3. Representative personal accounts

  4. Artificial or legal persons account

Show answer
Correct Option: A
Explanation:

Accounts relating to properties or assets are known as "Real accounts". 

A separate account is maintained for each asset e.g. Cash, Machinery, Building etc. 
Real accounts can be further classified into tangible or intangible.


Tangible real accounts are those accounts which represent assets and properties which can be seen, touched, felt, measured, purchased or sold. For e.g. Cash account, Machinery account, Furniture account, etc.