Impersonal Account

An impersonal account is a type of ledger account that does not bear the name of an individual and includes nominal accounts and real accounts.

What is an Impersonal Account?

An impersonal account is a type of ledger account that does not bear the name of a specific person. Instead, it includes nominal accounts (which track revenue, expenses, gains, and losses) and real accounts (which record assets, liabilities, and equity). Impersonal accounts are fundamental for preparing accurate financial statements, as they help in categorizing transactions in an organized manner.

Examples of Impersonal Accounts

  1. Nominal Account Examples:

    • Sales Account: Tracks income generated from sales.
    • Utilities Expense Account: Records expenses related to utilities.
    • Interest Earned Account: Logs interest income received.
  2. Real Account Examples:

    • Cash Account: Represents cash on hand and in bank.
    • Accounts Receivable: Shows outstanding amounts owed by customers.
    • Equipment Account: Lists the value of equipment owned by the company.

Frequently Asked Questions

What is the difference between impersonal and personal accounts?

Impersonal accounts track financial transactions that do not relate to specific individuals and include categories like assets, liabilities, revenues, and expenses. Personal accounts record transactions related to specific people or entities, such as customers, suppliers, and employees.

Are all impersonal accounts nominal accounts?

No, impersonal accounts encompass both nominal accounts (related to income, expenses, gains, and losses) and real accounts (related to assets, liabilities, and equity).

Why are impersonal accounts important?

Impersonal accounts are crucial for maintaining an organized ledger system, enabling accurate financial reporting, and ensuring compliance with accounting principles.

How do impersonal accounts appear on financial statements?

Nominal accounts contribute to the income statement by recording revenues and expenses. Real accounts show up on the balance sheet, capturing assets, liabilities, and equity.

Can an impersonal account be both real and nominal?

No, an impersonal account is either a real account or a nominal account, but not both.


  • Nominal Account: A ledger account that tracks all income, expenses, gains, and losses, ultimately used to determine the company’s net profit or loss during an accounting period.
  • Real Account: A ledger account that tracks assets, liabilities, and equity. These accounts are carried forward to the next accounting period.
  • Personal Account: A ledger account that tracks transactions related to individuals or entities including customers, suppliers, and employees.
  • Ledger: A book or other collection of financial accounts.
  • Balance Sheet: A financial statement that summarizes a company’s assets, liabilities, and shareholders’ equity at a specific point in time.

Online References


Suggested Books for Further Studies

  1. “Financial Accounting Theory and Analysis: Text and Cases” by Richard Schroeder and Myrtle Clark
  2. “Intermediate Accounting” by Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
  3. “Accounting Made Simple: Accounting Explained in 100 Pages or Less” by Mike Piper
  4. “Principles of Accounting” by Belverd E. Needles and Marian Powers
  5. “Financial Accounting: An International Introduction” by David Alexander and Christopher Nobes

Accounting Basics: “Impersonal Account” Fundamentals Quiz

### What type of ledger account does not bear the name of an individual? - [x] Impersonal Account - [ ] Personal Account - [ ] Junior Account - [ ] Special Account > **Explanation:** Impersonal accounts do not bear the names of individuals and include nominal and real accounts. ### Which of the following is a real account? - [x] Equipment Account - [ ] Sales Account - [ ] Interest Earned Account - [ ] Utilities Expense Account > **Explanation:** Equipment accounts are real accounts as they track assets. ### Which statement is true about nominal accounts? - [ ] They carry forward to the next accounting period. - [x] They are closed at the end of the accounting period. - [ ] They track assets. - [ ] They represent liabilities. > **Explanation:** Nominal accounts are closed at the end of the accounting period, and their balances are transferred to the income statement. ### What type of account is a "Cash Account"? - [ ] Nominal Account - [x] Real Account - [ ] Personal Account - [ ] Junior Account > **Explanation:** Cash Accounts are real accounts that track the asset of cash. ### Which of the following statements is true about real accounts? - [ ] They track income. - [ ] They track expenses. - [x] They show up on the balance sheet. - [ ] They are closed at the end of the period. > **Explanation:** Real accounts are shown on the balance sheet and track assets, liabilities, and equity. ### What is one characteristic of impersonal accounts? - [ ] They always pertain to employees. - [x] They do not relate to specific individuals. - [ ] They include specific customer details. - [ ] They are personal accounts. > **Explanation:** Impersonal accounts do not relate to specific individuals but track categories like assets, liabilities, and expenses. ### In which financial statement do nominal accounts appear? - [ ] Balance Sheet - [x] Income Statement - [ ] Cash Flow Statement - [ ] Statement of Equity > **Explanation:** Nominal accounts appear in the income statement to reflect revenue and expenses. ### Can a cash account be considered both a real and nominal account? - [ ] Yes, it can. - [x] No, it cannot. - [ ] Only if it is a corporate account. - [ ] It depends on the context. > **Explanation:** A cash account is exclusively a real account that tracks an asset. ### What must an account have to qualify as an impersonal account? - [ ] The name of a person - [ ] A balance less than $100 - [x] It must not pertain to any individuals specifically. - [ ] It must be a part of the income statement. > **Explanation:** Impersonal accounts do not pertain to any specific individuals and instead categorize broader financial transactions. ### Who primarily uses impersonal accounts? - [ ] Only small businesses - [ ] NGOs - [ ] Governments - [x] All types of organizations > **Explanation:** All types of organizations use impersonal accounts to maintain their financial records and prepare financial statements.

Thank you for enhancing your understanding of impersonal accounts in accounting through this comprehensive summary and engaging quiz! Keep striving for excellence in your financial knowledge!


Tuesday, August 6, 2024

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