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Question

Real accounts are related to _____________.


A
Assets
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B
Expenses, losses and incomes
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C
Debtors, creditors etc.
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D
All of the above
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Solution

The correct option is A Assets
Accounts relating to properties or assets are known as "Real Accounts". A separate account is maintained for each asset e.g., Cash, Machinery, Building, etc. Real accounts can be further classified into tangible and intangible.
  1. Tangible real accounts: These accounts represent assets and properties which can be seen, touched, felt, measured, purchased and sold. For e.g. Machinery account, Cash account.
  2. Intangible real accounts: These accounts represent assets and properties which cannot be seen, touched or felt but they can be measured in terms of money. For e.g. Goodwill account, Patents account, etc.
The rule for real account is: Debit what comes in; Credit what goes out.

Fundamentals of Accounting and Auditing

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