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Question
The basic rule of book-keeping "Debit what comes in and credit what goes out" is applicable to ____________.
The basic rule of book-keeping "Debit what comes in and credit what goes out" is applicable to ____________.
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Solution
The correct option is B Real account
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, purchased, measured 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 hey can be measured in terms of money. For e.g. Patent account, Goodwill account.
The rule for Real accounts is: Debit what comes in; Credit what goes out.
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, purchased, measured 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 hey can be measured in terms of money. For e.g. Patent account, Goodwill account.
The rule for Real accounts is: Debit what comes in; Credit what goes out.
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