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Consider the following statements and identify the wrong statement.
- a)All personal and real accounts ultimately show balance.
- b)The balances of nominal accounts are transferred to Profit and Loss Account
- c)Separate account is opened in ledger book for each account
- d)Rent is a personal account but outstanding rent is a nominal account.
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements and identify the wrong statement.a)A...
Wrong Statement: Rent is a personal account but outstanding rent is a nominal account.
Explanation:
Personal Account: It records transactions related to individuals, firms, companies, or any other entity. These accounts are classified based on their nature, such as natural persons, artificial persons, and representative persons. Examples of personal accounts are the accounts of debtors, creditors, bank, and capital.
Real Account: It records transactions related to assets, liabilities, and capital of the business. These accounts are classified based on their nature, such as tangible assets, intangible assets, and liabilities. Examples of real accounts are the accounts of cash, land, building, machinery, and loans.
Nominal Account: It records transactions related to expenses, losses, incomes, and gains of the business. These accounts are classified based on their nature, such as indirect expenses, direct expenses, and incomes. Examples of nominal accounts are the accounts of salaries, rent, interest, commission, and profit.
All personal and real accounts ultimately show balance as they are affected by the debit and credit transactions. On the other hand, the balances of nominal accounts are transferred to the Profit and Loss Account at the end of the accounting period.
A separate account is opened in the ledger book for each account to record the transactions related to that account.
However, the statement that "Rent is a personal account but outstanding rent is a nominal account" is wrong. Rent account is a nominal account as it records the expenses of the business. Outstanding rent is also a nominal account as it represents the expenses that are due but not paid yet. Hence, both rent and outstanding rent are nominal accounts.
Explanation:
Personal Account: It records transactions related to individuals, firms, companies, or any other entity. These accounts are classified based on their nature, such as natural persons, artificial persons, and representative persons. Examples of personal accounts are the accounts of debtors, creditors, bank, and capital.
Real Account: It records transactions related to assets, liabilities, and capital of the business. These accounts are classified based on their nature, such as tangible assets, intangible assets, and liabilities. Examples of real accounts are the accounts of cash, land, building, machinery, and loans.
Nominal Account: It records transactions related to expenses, losses, incomes, and gains of the business. These accounts are classified based on their nature, such as indirect expenses, direct expenses, and incomes. Examples of nominal accounts are the accounts of salaries, rent, interest, commission, and profit.
All personal and real accounts ultimately show balance as they are affected by the debit and credit transactions. On the other hand, the balances of nominal accounts are transferred to the Profit and Loss Account at the end of the accounting period.
A separate account is opened in the ledger book for each account to record the transactions related to that account.
However, the statement that "Rent is a personal account but outstanding rent is a nominal account" is wrong. Rent account is a nominal account as it records the expenses of the business. Outstanding rent is also a nominal account as it represents the expenses that are due but not paid yet. Hence, both rent and outstanding rent are nominal accounts.
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Community Answer
Consider the following statements and identify the wrong statement.a)A...
Rent is nominal account as it is an expense or income..and outstanding rent is a personal account as it someones personal.
so the correct answer is D.
so the correct answer is D.
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Consider the following statements and identify the wrong statement.a)All personal and real accounts ultimately show balance.b)The balances of nominal accounts are transferred to Profit and Loss Accountc)Separate account is opened in ledger book for each accountd)Rent is a personal account but outstanding rent is a nominal account.Correct answer is option 'D'. Can you explain this answer?
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Consider the following statements and identify the wrong statement.a)All personal and real accounts ultimately show balance.b)The balances of nominal accounts are transferred to Profit and Loss Accountc)Separate account is opened in ledger book for each accountd)Rent is a personal account but outstanding rent is a nominal account.Correct answer is option 'D'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Consider the following statements and identify the wrong statement.a)All personal and real accounts ultimately show balance.b)The balances of nominal accounts are transferred to Profit and Loss Accountc)Separate account is opened in ledger book for each accountd)Rent is a personal account but outstanding rent is a nominal account.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements and identify the wrong statement.a)All personal and real accounts ultimately show balance.b)The balances of nominal accounts are transferred to Profit and Loss Accountc)Separate account is opened in ledger book for each accountd)Rent is a personal account but outstanding rent is a nominal account.Correct answer is option 'D'. Can you explain this answer?.
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