Account Heads

• Account Heads are decided on the basis of

benefits to the parties involved in the
transaction.
• Account Heads are different names given to
different types of assets, liabilities,
income/profit and expenses/ losses.
 Account Heads
• Examples :
• 1.Bank loan a\c is the name for liability
towards bank.
• 2. Buildings a\c is an accounting head for
Buildings.
• 3. Printing & Stationery is an accounting
head for expenses on printing and
stationery.
 Account Heads

Types of Accounts
Personal Real Nominal
 Types of Accounts
• 1.Personal account- It deals with
accounts of individuals like
creditors, debtors, bank. It shows
the balance due to them or due
from them on a particular date.
 Types of Accounts
• 2. Real Account- It represents
assets like plant and machinery,
land and building, goodwill. As on
a particular date, this account
shows the worth of the asset.
 Types of Accounts
• 3.Nominal account- It consists of
different types of expenses or incomes
or loss or profit. These accounts show
the amount of income earned or
expenses incurred for a particular
period, say, a month, a year.
 Examples
Personal Real Nominal
Bank Plant & Mach. Salaries
Debtors Land & Bldg. Rent Paid
Creditors Goodwill Rent recd.
Capital Furniture Freight
Drawings Cash Repairs
Loan Stock Comm. recd.
Bank Overdraft Sales Electricity
 Rules of Debit & Credit
Personal Real Nominal

Debit The Receiver What comes All expenses

in & losses

Credit The Giver What goes All incomes

out & gains
The Accounting Equation

Assets = Liabilities +
Stockholder’s or Owners’ Equity
 Accounting Jargon
• To increase an asset’s balance,
debit the asset a\c.
• To decrease an asset’s balance,
credit the asset a\c.
 Accounting Jargon
• To increase the liability balance,
credit the liability a\c.
• To decrease the liability balance,
debit the liability a\c.