Nature of Account
This query is : Resolved
18 July 2010
Sir, I've been going through the chapters Amalgamation and Dissolution.
There I met with an account named
"REALISATION A/C".
I saw that Assets and liabilities are transferred to such A/C to know the last Profit or Loss.
But I'm confused regarding its nature. What nature does this A/C hold...Real, nominal or personal....and Why...???
Same is the case of SUSPENSE A/C. I want to know its nature too.
There I met with an account named
"REALISATION A/C".
I saw that Assets and liabilities are transferred to such A/C to know the last Profit or Loss.
But I'm confused regarding its nature. What nature does this A/C hold...Real, nominal or personal....and Why...???
Same is the case of SUSPENSE A/C. I want to know its nature too.
19 July 2010
Realisation account - as the name indicates is the one into which all the assets and liabilities are dumped at the time of getting realised (sold/disposed off). the assets and liabilities may be disposed at profit or loss and the over all profit or loss is collected in that realisation acccount.
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19 July 2010
It is a nominal A/c. The reason is very simple.
For personal account there should be a person. Realisation A/c is not a person.
For real account, either it should be a asset or liability but it is neither a asset nor a liability. So it cannt be real account.
For nominal account it should be either a expense, income, loss or gain. In the realisation account we calculate profit or loss on sale of assets and payment of liabilities. So, here the output is either profit or loss. It means that it fulfills the requirement of nominal account. Hence it is a nominal account.
For personal account there should be a person. Realisation A/c is not a person.
For real account, either it should be a asset or liability but it is neither a asset nor a liability. So it cannt be real account.
For nominal account it should be either a expense, income, loss or gain. In the realisation account we calculate profit or loss on sale of assets and payment of liabilities. So, here the output is either profit or loss. It means that it fulfills the requirement of nominal account. Hence it is a nominal account.
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19 July 2010
Suspense a/c is a real account as it is shown in the balance sheet and as it is not a person so can not be a personal account. The only option left is real account.
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19 July 2010
Thanks a lot.
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