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Suspense account is . account? nominal, real or personal?
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Suspense account is . account? nominal, real or personal?
Suspense Account
The suspense account is classified as a current asset, since it is most commonly used to store payments related to accounts receivable. It is possible to also have a liability suspense account, to contain accounts payable whose disposition is still being decided.
The suspense account is classified as a current asset, since it is most commonly used to store payments related to accounts receivable. It is possible to also have a liability suspense account, to contain accounts payable whose disposition is still being decided.
Nominal Account
A nominal account is an account in which accounting transactions are stored for one fiscal year. At the end of the fiscal year, the balances in these accounts are transferred into permanent accounts. Doing so resets the balances in the nominal accounts to zero, and prepares them to accept a new set of transactions in the next fiscal year. Nominal accounts are used to collect accounting transaction information for the following types of transactions, all of which appear in the income statement:
- Revenues
- Expenses
- Gains
- Losses
Thus, revenues from the sale of services, the cost of goods sold, and a loss on sale of an asset are all examples of the transactions that are recorded in nominal accounts.
Real Accounts
All assets of a firm, which are tangible or intangible, fall under the category “Real Accounts“.
Tangible real accounts are related to things that can be touched and felt physically. Few examples of tangible real accounts are building, machinery, stock, land, etc.
Intangible real accounts are related to things that can’t be touched and felt physically. Few examples of such real accounts are goodwill, patents, trademarks, etc.
Personal Accounts
These accounts are related to individuals, firms, companies, etc. A few examples of personal accounts include debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, capital, drawings, etc.
Natural personal accounts: This type of personal accounts is the simplest to understand out of all and includes all God’s creations who have the ability to deal, who, in most cases, are people. E.g. Kumar’s A/C, Adam’s A/C, etc.
Artificial personal accounts: Personal accounts which are created artificially by law, such as corporate bodies and institutions, are called Artificial personal accounts. E.g. Pvt Ltd companies, LLCs, LLPs, clubs, schools, etc.
Representative personal accounts: Accounts which represent a certain person or a group directly or indirectly. E.g. Let’s say that wages are paid in advance to an employee – a wage prepaid account will be opened in the books of accounts. This wages prepaid account is a representative personal account indirectly linked to the person.
This question is part of UPSC exam. View all CA Foundation courses
Most Upvoted Answer
Suspense account is . account? nominal, real or personal?
All of them because suspense a/c can be open for all nominal, real and personal
Community Answer
Suspense account is . account? nominal, real or personal?
Suspense a/c is real as well as nominal as well as personal account.
as per the situation it is decided
as per the situation it is decided
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Suspense account is . account? nominal, real or personal?
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Suspense account is . account? nominal, real or personal? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Suspense account is . account? nominal, real or personal? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Suspense account is . account? nominal, real or personal?.
Suspense account is . account? nominal, real or personal? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Suspense account is . account? nominal, real or personal? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Suspense account is . account? nominal, real or personal?.
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