BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Real A/c
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Nominal A/c
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Personal A/c
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Income
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Detailed explanation-1: -Since cash is a tangible asset, it is part of a real account. Capital is a personal account. As per the golden rule of real and personal accounts: Debit what comes in.
Detailed explanation-2: -A cash account is a type of brokerage account in which the investor must pay the full amount for securities purchased. An investor using a cash account is not allowed to borrow funds from his or her broker-dealer in order to pay for transactions in the account (trading on margin).
Detailed explanation-3: -Cash on hand is used like a savings account, but money is only withdrawn if it’s absolutely needed. Funds are saved up for a “rainy day” or to cover much-needed expenses to keep the business running. To ensure cash on hand can cover these extra or unexpected costs, it is important to calculate funds accurately.
Detailed explanation-4: -Hence, these accounts are also called Permanent accounts. Real accounts represent assets, liabilities, shareholder’s equity or capital. Examples of Real accounts are cash, furniture, machinery, loans, banks, investments, land, equity, etc.