Q.Under the Traditional Classification of accounts, 'Outstanding Salary A/c' is classified as:

This question tests a genuinely tricky classification, since the account's name ("Salary") sounds like an expense at first glance.

The correct option is (c) Personal Account (Representative).

Why (c) is correct: "Outstanding Salary" refers to salary that has become due to employees for work already done, but which has not yet been paid at the date the accounts are prepared. It represents an amount the business owes to its employees as a group — even though it is not literally titled with the employees' own names, it stands in for them. This makes it a Representative Personal Account, exactly like Prepaid Insurance (representing the insurer) or Accrued Commission Receivable (representing the party who owes it).

Why the other options are wrong:

• (a) Real Account is wrong — a Real account relates to an asset/property owned by the business; Outstanding Salary is not an asset the business owns, it is an amount the business owes, so it cannot be Real.
• (b) Nominal Account is wrong, though it is the most tempting answer since "Salary A/c" itself (the actual expense, when paid) IS Nominal. But "OUTSTANDING Salary A/c" is a different account altogether — it is the LIABILITY of unpaid salary at a point in time, not the expense itself, so the Personal (Representative) classification applies instead.
• (d) None of these is wrong since (c) correctly classifies the account. …

The single most common wrong answer here is (b) Nominal, because students see the word "Salary" and stop reading. Any account prefixed "Outstanding", "Prepaid", "Accrued", or "Advance" attached to an expense/income name is almo …