BACHELOR OF BUSINESS ADMINISTRATION

BUSINESS ADMINISTRATION

FINANCIAL ACCOUNTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Cash is a
A
Real A/c
B
Nominal A/c
C
Personal A/c
D
Income
Explanation: 

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Detailed explanation-3: -Cash on hand is used like a savings account, but money is only withdrawn if it’s absolutely needed.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.

There is 1 question to complete.