Difference between nominal and real account

Accounting

Contents
MAIN BODY.............................................................................................................................................3
Question 1...............................................................................................................................................3
Question 2...............................................................................................................................................4
Question 3...............................................................................................................................................5
REFERENCES..........................................................................................................................................7

MAIN BODY
Question 1
Difference between nominal and real account?
Basis Nominal account Real account
Time of
closing
account
These accounts are closed at the end
of year.
These accounts are not closed and it is
kept open. In the next year, balance is
forward.
Objective The objective of this account is to
know about net profitability and loss.
While real accounts’ objective is to
know about financial position.
Alternative
name
This account is also known as
temporary account.
It is known as permanent account.
The nominal accounts are known by this name because under it information is contained for a
particular time period that is of one year (Ozgode, 2019). At the end of year, this account is
closed.
While real account is known by this name because in this information is included for a longer
time period and at the end of year, information is forwarded for next year.
Types of information included in nominal and real account?
Both accounts consist different types of information. Such as nominal account includes
information about company’s sales revenues, cost or expenses. As well as amount of net profit
and loss at the end of financial year.
In the real account, information about net assets, liabilities, owners’ equity is included that is
used to know about financial position of company.
Financial statement that contains the information from nominal accounts?