ch-6

Question 1

What is balance of an account?

Answer 1

A balance of an account is the difference between the total of its debit and credit sides

Question 2

What are personal accounts. What is its main purpose?

Answer 2

Accounts which relate to persons i.e individuals, firms, etc. Its main purpose is preparing personal accounts to determine the balance due to or due from persons or organisations

Question 3

Distinguish between Natural personal accounts, Artificial personal accounts and Representative personal accounts.

Answer 3

The term ‘Natural persons’ means persons who are creations of god. Therefore, these will include accounts in individual name.
Artificial personal accounts- These accounts include accounts of corporate bodies/institutions which are recognized as persons in business dealings
Representative personal accounts- These are accounts which represent a certain person or a group of persons

Question 4

What are impersonal accounts?

Answer 4

Accounts which are not personal such as machinery account, cash account, etc

Question 5

Distinguish between Real accounts and nominal (Revenue/Expense) accounts.

Answer 5

Real accounts are the accounts which relate to tangible/intangible assets of the firm (excluding debtors)
Accounts which relate to expenses, losses, gains, etc. are nominal acounts