While recording transactions in the books of account one needs to classify account so as to make correct entries in the journal. Here is the list of classification of accounts –
1. Personal accounts – It refers to those accounts which relate to an individual, firm, or a company. It can be further classified as natural, artificial and representative personal account.
2. Real accounts – It refers to all those accounts whose value can be measured in monetary terms. It can of two types one is tangible real account and other is intangible real account. Example of real tangible account is land, building and example of intangible account is patent or goodwill.
3. Nominal Accounts – It refers to all those accounts which relate to the expenses and incomes of the company.