Question

What are the three different types of personal accounts?

Answer 1

Under the double-entry system of book-keeping, for the purpose of recording the various financial transactions, the accounts are classified as personal accounts and impersonal accounts.

1. Natural person’s account: Natural person means human beings.
   Example: Vinoth account, Malini account.
2. Artificial person’s account: Artificial person refers to persons other than human beings recognized by law as persons. They include business concerns, charitable institutions, etc.
   Example: BHEL account, Bank account.
3. Representative personal accounts: These are the accounts that represent persons natural or artificial or a group of persons.
   Example: Outstanding salaries account, Prepaid rent account. When expenses are outstanding, it is payable to a person. Hence, it represents a person.