Explain the following types of accounts and in each case, state the rules regarding the recording of transaction in their debit and credit ides:

• Personal Account;
• Real Account;
• Nominal Account;
• Liabilities Account;
• Assets Account.

observation

Majority of the candidates’ attempted this question and their performance was very poor. The expected answers includes:
Q1 (a) Personal Account -  It is accounts of persons (natural/artificial/individual/organizations) dealing with the business.
             Rule:       Dr  -  The receiver
                             Cr  -  The giver

      (b) Real Account -  This relates to accounts of items that can be seen, touch or
be moved.

            Rule:        Dr - Increases in value (what comes in)
                            Cr - Decreases in value (what comes in)

1. Nominal Account - This relates to accounts of income and expenditure

 of a business.

             Rule:       Dr - losses and expenses
                           Cr - incomes and gains

     (d)   Liabilities Account - It relates to accounts of the indebtedness of a business.
              Rule:        Dr - decreases in liability
                          Cr - increases in liability

    (e)  Assets Account - It relates to the accounts of items owned by the business.
             Rule:       Dr - increases in assets
                         Cr - decreases in assets