Question

Loan Account is __________.

• A. Real
• B. Personal
• C. Nominal
• D. All of the above

Answer 1

The correct option is B Personal

Personal 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, drawings, capital, etc.

Representative personal accounts represent a certain person or group directly or indirectly. E.g. Let's say that wages are paid in advance to an employee - a wage prepaid account will be opened in the books of accounts. This wages prepaid account is a representative personal account indirectly linked to the person.

Loan Account is a representative personal account, as it represents the person from whom the loan is obtained or to whom the loan is given. Hence, it is classified as a personal account.