Differentiate between personal and impersonal accounts

Classification of Accounts

Accounts can be classified into two main categories:

1. Personal accounts
2. Impersonal accounts

a. Personal accounts

Personal accounts are for names of persons or organizations. They may contribute either assets or liabilities to the business. They are either sundry debtors or creditors.

b. Impersonal accounts

Impersonal accounts are subdivided into real accounts and nominal accounts.

1. Real accounts

   Represent all possessions of the business, e.g., cash, bank, motor van, furniture, filling stock, and premises.

2. Nominal accounts

   Are further subdivided into:

   i. Revenue accounts: e.g., discounts received, sales, commission received, and other income. Revenue accounts are capital in nature. They have an increase effect.

   ii. Expense accounts: e.g., purchases, discount allowed, and wages. Expense accounts are also capital in nature, but they have a decrease effect.

Example

Name of account	Classification
Building	Real account
Furniture	Real account
Sales	Nominal account
Purchases	Nominal account
Capital	Personal account
Cash	Real account
Bank	Real account
Mwita	Personal account
MUHIMBILI Hospital	Personal account
Motor van	Real account
Profit	Nominal account
Discount allowed	Nominal account
Discount received	Nominal account