Q:
What is another name for a real account in accounting? is it a permanent or a temporary account? Also, what is another name for a nominal account? is it a permanent or a temporary account ?
Answer
There are broadly 2 Type of accounts
1. Personnel Accounts
2. Impersonnel Accounts.
Personnel Accounts is an account maintained to record transactions with persons. Based on the classification of the persons personnel account can be of
1. Natural Personnel Account (Mr. Ram, Mr. Robert, Mr.Rahim)
2. Artificial Person (all entities like companies, banks, municipal corporations, all statutory or non statutory bodies)
3. Representative Person: Representing group transactions for group of persons like Salary Payable Account. Taxes payable account.
Where as Impersonnel Account shall be of Two types.
A. Real Account B.Nominal Account.
Real Accounts are accounts to record transactions relating to Assets. Like Cash, Plant & Machinery etc., These type of accounts are permanent accounts.
Nominal Accounts are the accounts used to record the transactions relating to Income and Expenses. Like Salary, Power, Sales etc., At the end of the year all the nominal accounts are closed by transferring to Profit and loss account or Income and Expenditure account. The net differnce shall be carried forwarded to Balance Sheet.
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