Accounts relating to properties or assets are called Real Accounts. You have to maintain a separate account for each asset.
As per double entry system, the balances of Real Accounts are not canceled out at the end of the accounting year.
They are carried forward to the next year as the beginning or opening balances of the respective accounts.
Rule of Accounting Double Entry System for Real Accounts
Debit = What comes in.
Credit = What goes out.
Types of Real Accounts
In accounting, Real Accounts are further classified into tangible and intangible real accounts.
Tangible Real accounts are those that can be physically touched, seen and measured. For example, Machinery Account.
Intangible Real Accounts are those which cannot be touched physically but can be measured in value. For example, Goodwill Account.
If you have any queries please share in the comment section below. I will be more than happy to assist you.
Leave a Reply