CA Foundation Exam > CA Foundation Questions > Which of the following is wrong?a)All real an...
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Which of the following is wrong?
- a)All real and personal accounts are transferred to balance sheet
- b)Nominal accounts are transferred to P & L account
- c)Each account is opened separately in ledger
- d)Rent is a personal account, outstanding rent is nominal account
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
Which of the following is wrong?a)All real and personal accounts are t...
Incorrect Statement:
d) Rent is a personal account, outstanding rent is nominal account
Explanation:
Personal Accounts:
Personal accounts are those accounts that relate to individuals or organizations with whom the company has a business relationship. Personal accounts can be further divided into three categories - Natural, Artificial, and Representative.
Natural Personal Accounts:
Natural personal accounts are accounts that relate to individuals. For example, the accounts of employees, the proprietor, etc.
Artificial Personal Accounts:
Artificial personal accounts are accounts that relate to organizations. For example, the accounts of companies, firms, etc.
Representative Personal Accounts:
Representative personal accounts are accounts that relate to individuals or organizations that act as representatives of others. For example, the accounts of a sales agent, a commission agent, a consignee, etc.
Nominal Accounts:
Nominal accounts are accounts that relate to incomes, expenses, gains, or losses. These accounts are temporary in nature and are closed at the end of the accounting period.
Examples of nominal accounts are salaries, rent, interest, commission, etc.
Transfer of Accounts:
At the end of the accounting period, all the accounts are transferred to either the balance sheet or the profit and loss account.
Personal Accounts:
All personal accounts are transferred to the balance sheet as they represent the amount owed to or by the company.
Nominal Accounts:
All nominal accounts are transferred to the profit and loss account as they represent incomes or expenses incurred by the company.
Incorrect Statement:
Rent is a personal account, outstanding rent is nominal account
Rent is a nominal account as it represents an expense incurred by the company. Outstanding rent is also a nominal account as it represents an expense that is due but not yet paid.
Conclusion:
Hence, option D is the incorrect statement.
d) Rent is a personal account, outstanding rent is nominal account
Explanation:
Personal Accounts:
Personal accounts are those accounts that relate to individuals or organizations with whom the company has a business relationship. Personal accounts can be further divided into three categories - Natural, Artificial, and Representative.
Natural Personal Accounts:
Natural personal accounts are accounts that relate to individuals. For example, the accounts of employees, the proprietor, etc.
Artificial Personal Accounts:
Artificial personal accounts are accounts that relate to organizations. For example, the accounts of companies, firms, etc.
Representative Personal Accounts:
Representative personal accounts are accounts that relate to individuals or organizations that act as representatives of others. For example, the accounts of a sales agent, a commission agent, a consignee, etc.
Nominal Accounts:
Nominal accounts are accounts that relate to incomes, expenses, gains, or losses. These accounts are temporary in nature and are closed at the end of the accounting period.
Examples of nominal accounts are salaries, rent, interest, commission, etc.
Transfer of Accounts:
At the end of the accounting period, all the accounts are transferred to either the balance sheet or the profit and loss account.
Personal Accounts:
All personal accounts are transferred to the balance sheet as they represent the amount owed to or by the company.
Nominal Accounts:
All nominal accounts are transferred to the profit and loss account as they represent incomes or expenses incurred by the company.
Incorrect Statement:
Rent is a personal account, outstanding rent is nominal account
Rent is a nominal account as it represents an expense incurred by the company. Outstanding rent is also a nominal account as it represents an expense that is due but not yet paid.
Conclusion:
Hence, option D is the incorrect statement.
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Community Answer
Which of the following is wrong?a)All real and personal accounts are t...
Option d is the wrong statement because rent is a nominal account as it was an expense and outstanding rent is a representative personal account therefore option d is the correct answer
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Which of the following is wrong?a)All real and personal accounts are transferred to balance sheetb)Nominal accounts are transferred to P & L accountc)Each account is opened separately in ledgerd)Rent is a personal account, outstanding rent is nominal accountCorrect answer is option 'D'. Can you explain this answer?
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