Question

Match List I with List II and select the correct answer using the codes given below:

List I	List II
A. Rent prepaid and prepaid Insurance	1. Nominal accounts
B. Goodwill and patents	2. Real accounts
C. Rent, Interest	3. Personal accounts

• A. $A=3,B=2,C=1$
• B. $A=1,B=2,C=3$
• C. $A=2,B=1,C=3$
• D. $A=2,B=3,C=1$

Answer 1

The correct option is A $A=3,B=2,C=1$

• Prepaid expenses are recorded in the books at the end of an accounting period to show true numbers of a business. Prepaid (unexpired) expense is a personal account and is shown on the Assets side of a balance sheet.
• Real account - All assets of a firm, whether tangible or intangible, fall under the category “Real Accounts“.

Examples of intangible real accounts are goodwill, patents, trademarks, copyrights, etc.

• Nominal account - Accounts which are related to expenses, losses, incomes and gains are called Nominal accounts.These accounts types are related to income or gains and expenses or losses.
• For example: – Rent A/c, commission received A/c, salary A/c, wages A/c, conveyance A/c, etc.