Question

Prepaid/Advance Salary A/c is classified as _______.

• A. Representative personal A/c
• B. Real A/c
• C. Nominal A/c
• D. Both (a) & (b)

Answer 1

The correct option is A Representative personal A/c

There are mainly three types of accounts in accounting: Real, Personal and Nominal accounts. Personal accounts are classified into three subcategories: Artificial, Natural, and Representative. 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, capital, drawings, etc. Representative Personal accounts are those which represent a certain person or a 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 directly linked to the person. Prepaid.Advance Salary A/c are classified as representative personal A/c.