Doubt related to the classification of accounts

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Ashish Jha (Querist)
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10 April 2019 Real account are the accounts which relate to tangible or intangible assets of the firm. So how could a reserve be treated as a real account.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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10 April 2019 you need to first understand the difference between real and nominal accounts. Nominal accounts are closed at the end of the year whereas real accounts are carried forward to the balance-sheet. Any account that forms part of balance-sheet is therefore classified as real account. Reserve being one such account is classified as real account.

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