Real Accounts or Permanent Accounts meaning and Explanation
Types of Account ( Real Accounts)
- Personal Accounts
- Real Accounts
- Nominal Accounts
Real Accounts
Real Accounts: 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 Real Account
- Intangible Real Account
(a) Tangible Real Accounts: These accounts represent assets and properties which can be seen, touched, felt, measured, purchased and sold. e.g. Machinery account Cash account, Furniture account, stock account etc.
(b) 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. e.g., Goodwill accounts, patents account, Trademarks account, Copyrights account, etc.
Real Account also known as Permanent accounts. Permanent accounts whose balances are carried over from one accounting period to another. Permanent accounts are those accounts that continue to maintain ongoing balances over time. Essentially all accounts that are aggregated into the balance sheet are considered permanent accounts; these are the asset, liability, and equity accounts. In a nonprofit entity, the permanent accounts are the asset, liability, and net asset accounts.
A permanent account does not necessarily have to contain a balance. If no transactions are ever recorded that involve such an account, or if the balance has been zeroed out, a permanent account may contain a zero balance.