COURSE

BUS 1102 – Basic Accounting

The full “accounting cycle” which culminates in closing the books and producing financial statements. Discuss the differences between Permanent “real” accounts and Temporary ¨nominal¨ accounts:

• What type of information is contained in nominal accounts, and what type of information is contained in real accounts?
• Which financial statement contains the information from nominal accounts and which contains the information from real accounts?
• Provide an example of real accounts and an example of nominal accounts.

SOLUTION  

Hello Class,

A definition of “real” and “nominal” accounts is in order before delving into their distinctions. Unlike personal accounts, which are closed annually after the fiscal year, real accounts, like bank accounts, continue to be used throughout the year. Contrarily, a temporary nominal account is one in which any remaining funds are forfeited after a certain period, and the account is closed. Expense accounts are an instance of a short-term account.…..please click the icon below to purchase the solution at $5