Page 87 - Book-keeping for Secondary Schools Student’s Book Form One

Ledgers

(b) Impersonal accounts
These are types of accounts that record all other transactions except those recorded
in personal accounts. They do not record transactions relating to persons or firms.
Impersonal accounts are further classified into real accounts and nominal accounts as
follows:

FOR ONLINE READING ONLY
Real accounts
These accounts record transactions relating to assets and liabilities in the general
ledger. These accounts are real because they are not closed at the end of the accounting
period, their balances are carried forward to the next period. Examples of real accounts
include accounts for assets such as land and buildings, machinery, furniture and fittings,
Motor vehicles, accounts receivable, cash at the bank and cash in hand. Others include,
liabilities such as accounts payable, bank overdrafts and bank loans.

Nominal accounts
Nominal accounts record transactions relating to expenses and revenues. Expenses are
costs incurred for running a business. Examples of such expenses are rent, salaries,
purchases, carriage, advertising, discounts allowed and bad debts. Moreover, revenues
are earnings of a business. Examples of revenues are sales, creditors’ discount, interest
income, and commission income. Accounts falling under this category are closed at the
end of the accounting period with their figures transferred to the income (profit or loss)
statement.

Example 5.1
No. Name of Account Classification

1 Anna Personal account

2 Furniture Real account

3 Sales Nominal account

4 Losses Nominal account

5 Cash Real account

6 Capital Personal account

7 Buildings Real account

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