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Basic Accounting (Acc101)

By Precious Ichedi

Summary

Account in the general journal that does not close at the end of a period. In other words, these accounts stay open allowing their balances to accumulate and carry over to the next period for the company’s lifetime. Accounts are income statement accounts and are also called 'temporary accounts' in contrast to balance sheet (asset, liability, and owners' equity) accounts which are called 'permanent accounts' or 'real accounts.'



Basic Accounting (Acc101)
 
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Abstract

CASH ACCOUNT:

Cash accounting is an accounting method where receipts are recorded during the period they are received, and expenses are recorded in the period in which they are actually paid. Cash accounting is one of the two forms of accounting. The other is accrual accounting, where revenue and expenses are recorded when they are incurred. Small businesses often use cash accounting because it is simpler and more straightforward, and it provides a clear picture of how much money the business actually has on hand. Corporations, however, are required to use accrual accounting under generally accepted accounting principles

REAL ACCOUNT:

A real account is a permanent account in the general journal that does not close at the end of a period. In other words, these accounts stay open allowing their balances to accumulate and carry over to the next period for the company’s lifetime.

PERSONAL ACCOUNT:

A personal account is an account for use by an individual for that person's own needs. It is a relative term to differentiate them from those accounts for corporate or business use. The term "personal account" may be used generically for financial accounts at banks and for service accounts such as accounts with the phone company, or even for e-mail accounts.

NOMINAL ACCOUNT:

Nominal accounts are income statement accounts and are also called 'temporary accounts' in contrast to balance sheet (asset, liability, and owners' equity) accounts which are called 'permanent accounts' or 'real accounts.'



 

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