Real, Personal and Nominal accounts

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2. Real, Personal and Nominal Accounts

There are mainly three types of accounts in accounting: Real, Personal and Nominal accounts, personal accounts are classified into three subcategories: Artificial, Natural, and Representative.

If you fail to identify an account correctly as either a real, personal or nominal account, in most cases, you will get end up recording incorrect journal entries.

2.1. Real Accounts

All assets of a firm, which are tangible or intangible, fall under the category “Real Accounts“.

Tangible real accounts are related to things that can be touched and felt physically. Few examples of tangible real accounts are building, machinery, stock, land, etc.

Intangible real accounts are related to things that can’t be touched and felt physically. Few examples of such real accounts are goodwill, patents, trademarks, etc.

Golden rule for real accounts

Debit what comes in

Credit what goes out

Example

The transaction below shows the interaction of two different real accounts: one is furniture and the other is cash, both of them are assets of the company and hence classified as real accounts.

2.2. Personal Accounts

These accounts are related to individuals, firms, companies, etc. A few examples of personal accounts include debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, capital, drawings, etc.

Example

The transaction below demonstrates the interaction between two different personal accounts, one of which is a private limited company and the other one is a bank.

2.3. Nominal Accounts

Accounts which are related to expenses, losses, incomes or gains are called Nominal accounts. The dictionary meaning of the word “nominal” is “existing in name only” and the meaning remains absolutely true in accounting sense too, because nominal accounts do not really exist in physical form, but behind every nominal account money is involved. E.g. Purchase A/C, Salary A/C, Sales A/C, Commission received A/C, etc.

The final result of all nominal accounts is either profit or loss which is then transferred to the capital account.

Example

The following example shows a transaction where a nominal account deals with a real a/c.

3.Vulnerability in Windows Kernel-Mode Drivers Could Allow Remote Code Execution (2639417)

General Information

Executive Summary

This security update resolves a publicly disclosed vulnerability in Microsoft Windows. The vulnerability could allow remote code execution if a user opens a specially crafted document or visits a malicious Web page that embeds TrueType font files.

This security update is rated Critical for all supported releases of Microsoft Windows. For more information, see the subsection, Affected and Non-Affected Software, in this section.

The security update addresses the vulnerability by modifying the way that a Windows kernel-mode driver handles TrueType font files. For more information about the vulnerability, see the Frequently Asked Questions (FAQ) subsection for the specific vulnerability entry under the next section, Vulnerability Information.

This security update also addresses the vulnerability first described in Microsoft Security Advisory 2639658.

Recommendation. The majority of customers have automatic updating enabled and will not need to take any action because this security update will be downloaded and installed automatically. Customers who have not enabled automatic updating need to check for updates and install this update manually. For information about specific configuration options in automatic updating, see Microsoft Knowledge Base Article 294871.

For administrators and enterprise installations, or end users who want to install this security update manually, Microsoft recommends that customers apply the update immediately using update management software, or by checking for updates using the Microsoft Update service.

See also the section, Detection and Deployment Tools and Guidance, later in this bulletin.