An account is a homogeneous deal for recording financial information. In a standard accounting system, there exists a different accounts for each asset, each liability, and each type of proprietors equity, each item of revenue and expense.

Any account is like a coin which has two sides, namely, debit and credit side. In the ‘T-account format’ the Debit holds the left side and credit on right side. In accounting the two different terms ‘debit’ and ‘credit’ have their own treatments and they will not replicate each other but existence of corresponding entries will be there.

The entire accounts of the enterprise is broadly classified into two categories i.e. Personal accounts and Impersonal Accounts. Impersonal accounts further classified into two, they are Real and Nominal account. The treatments of these accounts are called as accounting principles.

Personal Accounts: Personal Accounts is an account which deals with a due balance either to or from these individuals on a particular period. It is an account normally reveals the outstanding balance of the firm to individuals. All the accounts which falls under this category have same kind of treatment and that is, "Debit the Receiver, Credit the Giver."

Real Account: It is a most important classification which highlights the real worth of the assets. This is the account principally deals with the movement of assets. It is an account which reveals the value and movement of the assets taking place in between the firm and also other parties due to any transactions.

The movement of the assets can be classified into two categories, i.e. the assets which are going out of the firm and the assets which are coming into the firm. The accounting treatment for this account is, "Debit what comes in, Credit what goes out."

Nominal Account: This account deals with the amount of incomes earned or expenses incurred. It takes in all expenses and losses as well as incomes and gains of the enterprise. Nominal account records the expenses and incomes which are not carried forwarded to near future. The accounting treatment for this account is, "Debit all the expenses and losses, Credit all incomes and gains"

In addition to the accounting principle we have the following rules:
• Debits are always equal to credits
• Assets are always equal to liabilities and owners equity


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