In accounting, there are three main types of accounts, each serving a distinct purpose in the financial record-keeping process. These accounts help track different financial activities and are essential for preparing financial statements. The three types of accounts are:

1. Personal Accounts:
   These accounts are related to individuals, firms, or organizations, either as debtors or creditors. Personal accounts track the financial transactions with people or entities that owe or are owed money. They are classified into three sub-categories:

   • Natural Personal Accounts: Relate to individuals (e.g., John, Sarah).

   • Artificial Personal Accounts: Represent organizations or entities (e.g., banks, companies).

   • Representative Personal Accounts: Represent amounts owed by or to a person or organization (e.g., Prepaid Expenses, Outstanding Expenses).

2. Real Accounts:
   These accounts represent assets or properties that a business owns, both tangible and intangible. Real accounts are permanent accounts because their balances are carried forward from one accounting period to the next. They are divided into:

   • Tangible Real Accounts: Physical assets like cash, buildings, machinery, or inventory.

   • Intangible Real Accounts: Non-physical assets such as patents, trademarks, goodwill, and copyrights.

3. Nominal Accounts:
   These accounts are used to track income, expenses, gains, and losses over a specific period. They are temporary accounts because their balances are reset to zero at the end of each accounting period. Examples include:

   • Revenue Accounts: Sales, service income, interest income.

   • Expense Accounts: Salaries, rent, utilities, insurance.

   • Gain or Loss Accounts: Gain on sale of assets, loss on investments.