No recent comment found.

What are Real Accounts & Nominal Accounts

December 8th, 2010 Comments off

Share |

Accounts are broadly classified into two (2) category namely: Personal Accounts and Impersonal Accounts ( see earlier article).

For Impersonal accounts, they can be sub-divided into (a) Real Accounts & (b) Nominal Accounts.

Below explain:

Real Accounts:

Related to assets or properties which are either:

Tangible real accounts-assets that can be touched, felt, measured, purchased and sold. Examples like land, building, furniture, stocks, cash accounts
Intangible real accounts-assets which have no physical existence but can be measured in monetary terms. For example, goodwill, patent rights, trade marks

Nominal Accounts:

Relates to all expenses, losses, incomes and gains. For examples interest received, wages, salaries, rent & postage. Appear in the Income Statement. In ledgers, separate account is opened for each of the item.
Nominal accounts are also called temporary accounts because they are ultimately taken up into the Income Statement..

Comments are closed now.

College Accounting Coach