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Difficulty: MediumLedger Classification and Double Entry Rules

Complete the following statement regarding ledger account classification and double-entry principles by providing the correct type of ledger account for each blank.

Answer:When office furniture is purchased on credit from Woodworks Ltd, the furniture account is classified as a 【real】 account, whereas the supplier's account, Woodworks Ltd, is classified as a 【personal】 account.

Answer

The furniture account is a real account, and the Woodworks Ltd account is a personal account.
Office furniture represents a tangible property/asset of the business, making it a real account. Woodworks Ltd is a corporate entity (creditor), making its ledger account a personal account.

Step-by-Step Solution

1
Identify the nature of the furniture account.
Furniture is a tangible asset owned by the business, which falls under real accounts.
Real accounts deal with physical assets and property of the enterprise.
2
Identify the nature of the Woodworks Ltd account.
Woodworks Ltd is a trade creditor (an entity/person to whom money is owed), which falls under personal accounts.
Personal accounts deal with individual persons, firms, or corporate entities.

Key Concept

Ledger Classification and Double Entry Rules
Estimated Time:1m 0s
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Ledger Classification and Double Entry Rules

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