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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 '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:
To understand the wrong statement, we need to know about the types of accounts in accounting and their characteristics.
Types of Accounts:
1. Personal Accounts: These accounts represent individuals, firms, or companies with whom the business has transactions. For example, accounts of customers, suppliers, owners, etc.
2. Real Accounts: These accounts represent tangible assets like land, building, machinery, furniture, etc., and intangible assets like patents, trademarks, etc.
3. Nominal Accounts: These accounts represent expenses, losses, incomes, and gains. For example, salaries, rent, interest, commission, etc.
Characteristics of Accounts:
1. Personal Accounts: These accounts have a debit aspect and a credit aspect. The receiver's account is debited, and the giver's account is credited.
2. Real Accounts: These accounts have a debit aspect and a credit aspect. The increase in assets is debited, and the decrease in assets is credited.
3. Nominal Accounts: These accounts have a debit aspect and a credit aspect. Expenses and losses are debited, and incomes and gains are credited.
Explanation of the Wrong Statement:
Rent is a personal account because it represents an individual or a firm to whom the rent is paid. However, outstanding rent is not a nominal account. It is still a personal account because it represents an individual or a firm to whom the rent is due but not paid. The outstanding rent account will be debited when the rent is paid in the future.
Conclusion:
Therefore, the correct statement is "Rent is a personal account, and outstanding rent is also a personal account."
Explanation:
To understand the wrong statement, we need to know about the types of accounts in accounting and their characteristics.
Types of Accounts:
1. Personal Accounts: These accounts represent individuals, firms, or companies with whom the business has transactions. For example, accounts of customers, suppliers, owners, etc.
2. Real Accounts: These accounts represent tangible assets like land, building, machinery, furniture, etc., and intangible assets like patents, trademarks, etc.
3. Nominal Accounts: These accounts represent expenses, losses, incomes, and gains. For example, salaries, rent, interest, commission, etc.
Characteristics of Accounts:
1. Personal Accounts: These accounts have a debit aspect and a credit aspect. The receiver's account is debited, and the giver's account is credited.
2. Real Accounts: These accounts have a debit aspect and a credit aspect. The increase in assets is debited, and the decrease in assets is credited.
3. Nominal Accounts: These accounts have a debit aspect and a credit aspect. Expenses and losses are debited, and incomes and gains are credited.
Explanation of the Wrong Statement:
Rent is a personal account because it represents an individual or a firm to whom the rent is paid. However, outstanding rent is not a nominal account. It is still a personal account because it represents an individual or a firm to whom the rent is due but not paid. The outstanding rent account will be debited when the rent is paid in the future.
Conclusion:
Therefore, the correct statement is "Rent is a personal account, and outstanding rent is also a personal account."
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Community Answer
Consider the following statements and identify the wrong statement.a)A...
Rent is a nominal account because it is a charge aginst the profit... and out standing rent is a representative personal account
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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 '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 '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 '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 'D'. Can you explain this answer?.
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