TYPES OF ACCOUNTS AND LEDGERS

Different Classes of Accounts

1. Nominal Accounts

Recording gains (income) and losses (expenses).

Examples: Expenses, Purchases, Sales, Discount Received, Interest Received

2. Real Account

Accounts recording assets.

Examples: Premises, Machinery, Equipment, Motor Vehicles, Furniture and Fitting, Cash Book

3. Personal Accounts

Account of credit customers and credit suppliers.

Examples: Accounts payable, accounts receivable.

There are also

1. Liability Accounts- amounts due to other organisations

2. Capital Accounts- for amounts recording the interest of the owner(s) of the business

DIFFERENT LEDGERS

1. General Ledger: for nominal, real, liability and capital accounts

2. Sales ledger: Credit customers (accounts receivables)
3. Purchase Ledger: Credit suppliers (Accounts payable)

INTERPRETING ACCOUNT ENTRIES AND BALANCES

1. Take each entry in date order.

2. Describe the transaction that has caused the entry to be made (including where appropriate a mention
of the source document involved).
3. State the amount.
 REVIEW POSTING FROM BOOKS OF ORIGINAL ENTRY

Note.

Apart from opening balances, entries in ledgers should ONLY be made from books of original entry.
SOLUTION