Q.Classify the following accounts as Personal, Real or Nominal:

Correct classification is the first, essential step before any debit/credit rule can even be applied to a transaction.

1. Ram's A/c — an account of a natural person the business deals with → Personal Account.
2. Machinery A/c — a tangible asset/property owned by the business → Real Account.
3. Rent A/c — an expense incurred by the business → Nominal Account.
4. Outstanding Salary A/c — represents the group of employees to whom salary is still owed → Personal Account (Representative).
5. Commission Received A/c — an income earned by the business → Nominal Account.
6. Goodwill A/c — an intangible asset/property owned by the business → Real Account.
   ✓Final answer

   (i) Personal (ii) Real (iii) Nominal (iv) Personal — Representative (v) Nominal (vi) Real.

Classifying 'Outstanding Salary A/c' as Nominal because 'salary' sounds like an expense — the word 'Outstanding' makes it a representative personal account standing in for the employees owed that money, distinct from the Salary A/c (expense) itself.