Tag: meaning and classification of accounts

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Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

Prepaid salary is ______________.

  1. Real Account

  2. Personal Account

  3. Nominal Account

  4. None of above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 Prepaid expenses are recorded in the books at the end of an accounting period to show true numbers of a business. Prepaid (Unexpired) expense is a personal account and is shown on the Assets side of a balance sheet. Expenses are amounts paid for goods or services purchased.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

Purchase is _______________.

  1. Real Accounts

  2. Personal Accounts

  3. Nominal Accounts

  4. None of above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Nominal Accounts are accounts related and associated to losses, expenses, income or gains. Examples include purchase account, sales account, salary A/c, commission A/c etc. 

Hence, purchase is nominal account.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

______ is an intangible real account.

  1. Land

  2. Building

  3. Goodwill

  4. Cash
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Goodwill in accounting is an intangible asset that arises when a buyer acquires an existing business. Goodwill represents assets that are not separately identifiable. 

It is classified as an intangible asset on the balance sheet, since it can neither be seen nor touched.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

The following accounts are never balanced _____________.

  1. Personal Accounts

  2. Real Accounts

  3. Nominal Accounts

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Nominal accounts are temporary accounts that are closed at the end of the accounting period; therefore, they are not balanced in the traditional sense of carrying a balance forward to the next period.