Differences between Real Accounts and Nominal Accounts:
The main differences between real accounts and nominal accounts are:
1. Real accounts are accounts of properties or assets of a business. But nominal accounts are accounts of expenses and losses, and incomes and gains of a business.
2. Real accounts represent something tangible, concrete or real (i.e., something which can be seen or felt). But nominal accounts do not represent anything tangible or real.
3. Real accounts, generally, show debit balances, whereas nominal accounts may show either debit balances or credit balances.
4. At the end of every accounting year, real accounts (i.e., the accounts of properties or assets) are balanced, and their balances are carried from one year to another. On the other hand, at the end of every accounting year, nominal accounts are not balanced, but are closed by transfer to trading account or profit and loss account.
5. As the balances of real accounts are carried from one year to another, real accounts exists year after year. But as the nominal accounts are closed at the end of every year, they do not exist year after year.
6. Real accounts are items of balance sheet, whereas nominal accounts are items of trading account or profit and loss account.
The main differences between real accounts and nominal accounts are:
1. Real accounts are accounts of properties or assets of a business. But nominal accounts are accounts of expenses and losses, and incomes and gains of a business.
2. Real accounts represent something tangible, concrete or real (i.e., something which can be seen or felt). But nominal accounts do not represent anything tangible or real.
3. Real accounts, generally, show debit balances, whereas nominal accounts may show either debit balances or credit balances.
4. At the end of every accounting year, real accounts (i.e., the accounts of properties or assets) are balanced, and their balances are carried from one year to another. On the other hand, at the end of every accounting year, nominal accounts are not balanced, but are closed by transfer to trading account or profit and loss account.
5. As the balances of real accounts are carried from one year to another, real accounts exists year after year. But as the nominal accounts are closed at the end of every year, they do not exist year after year.
6. Real accounts are items of balance sheet, whereas nominal accounts are items of trading account or profit and loss account.
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