REAL ACCOUNTS Meaning and
Definition
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Real accounts, also known as permanent accounts or balance sheet accounts, are a category of accounts in financial accounting that represent the ongoing and long-term financial position of a company. These accounts consist of assets, liabilities, and owner's equity, which are all reflected on the company's balance sheet.
Real accounts capture transactions that have a lasting impact on a company's financial position. They do not get closed at the end of an accounting period like temporary accounts do. Instead, real accounts carry forward their ending balances to the next accounting period, ensuring the continuity of financial information.
Asset accounts within real accounts category include items such as cash, accounts receivable, inventory, and property, plant, and equipment. Liabilities accounts encompass obligations like accounts payable, loans, and deferred revenue. Lastly, owner's equity accounts reflect the residual interest in the company's assets after deducting liabilities.
Due to their permanence, real accounts play a crucial role in preparing the balance sheet, reflecting the financial standing of a company at a specific point in time. By recording all relevant financial transactions throughout an organization's lifespan, real accounts provide valuable information for management decision-making, financial analysis, and reporting to stakeholders.
It is important for accountants and financial professionals to distinguish between real and temporary accounts, as understanding the nature of accounts helps maintain accurate financial records and ensures compliance with accounting principles and standards.
Common Misspellings for REAL ACCOUNTS
- eeal accounts
- deal accounts
- feal accounts
- teal accounts
- 5eal accounts
- 4eal accounts
- rwal accounts
- rsal accounts
- rdal accounts
- rral accounts
- r4al accounts
- r3al accounts
- rezl accounts
- resl accounts
- rewl accounts
- reql accounts
- reak accounts
- reap accounts
- reao accounts
- real zccounts
Etymology of REAL ACCOUNTS
The word "real" comes from the late Latin word "realis", which means "actual" or "genuine". It was derived from the Latin word "res", meaning "thing" or "matter". The word "accounts" originated from the Middle English word "accounte", which was borrowed from the Old French word "acompte", meaning "reckoning or calculation". So, when combined, "real accounts" can be understood as referring to genuine or actual calculations or reckonings.
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