NOTES


CA-Foundation > Principles and Practice of Accounting > Accounting Process - Basic Accounting Procedures - Journal Entries (Old & New)

Distinguish between Real Account & Nominal Account



Ans.
A real account is an account relating to properties and assets, other than personal accounts of the firm. Examples are land, buildings, machinery, cash, investments etc. Nominal accounts relate to expenses or losses, incomes and gains. Examples are: wages,salaries, rent, depreciation etc. The net result of all the nominal accounts is reflected as profit or loss which is transfered to the capital account.. Nominal accounts are therefore, temporary. The real accounts are shown in the balance sheet along with personal accounts.

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Notes of Accounting Process - Basic Accounting Procedures - Journal Entries (Old & New)



  1. Distinguish between Real Account & Nominal Account

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  2. Show the classification of the following accounts under traditional and accounting equation approach:

     a

    Rent outstanding

    g

    capital

    b

    Closing inventory

    h

    Sales tax payable

    c

    sales

    i

    Trade receivables

    d

    Bank fixed deposits

    j

    Depreciation

    e

    cash

    k

    drawings

    f

    Bad debts

     

     

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  3. Pass journal entries for the following transactions in the books of gamma bros.
    (i)      Employees had taken inventory worth Rs.1,00,000(cost price Rs.75,000) on the eve of deepawali and the same was deducted from their salaries in the subsequent month.
    (ii) Wages paid for erection of machinery Rs.18,000.
    (iii)      Income tax liability of proprietor Rs.1,17000 was paid out of petty cash.
    (iv)       Purchase of goods from naveen of the list price of Rs.2,00,000. He allowed 10% trade discount, Rs. 5000 cash discount was also allowed for quick payment.
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  4. calculate the missing amount for the following.               

     

            Assets       

       Liabilities

    Capital

    (a)

          1,50,000

       2,50,000  

                     

                   ?

    (b)

                      ?

     1,50,000

          75,000

    (c)

         14,50,000  

                     ?

      13,75,000

     

    (d)

         57,00,000    

        -2,80,000 

                 ?

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  5. Show the effect of increase and =(+), decrease = (-) and no change=(0) on the assets of the following transactions:

          a. Purchased office furniture, payment to be made next month.

          b. Collected cash for repair services

          c. Goods sold on credit.

          d. Withdrawal of cash by the owner for personal use.

          e.  Hired an employee as sales manager of the north wing.

          f.    Returned goods worth Rs. 50,000

          g.  One of our debtor agreed to pay his dues to Mr. C who is the creditor of the company with the same amount being due to him.

          h.   Entered into an agreement with Mehta & co. To purchase all Raw materials from their company from next year.

           Also give reasons for your answers.


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CA-Foundation - Principles and Practice of Accounting:

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