Goodwill

Dear Angle,

Goodwill is Real Account.

For explanation you must under stand about nature of real account.

Real Accounts

Accounts relating to properties or assets are known as ‘Real Accounts’, A separate account is maintained for each asset e.g., Cash Machinery, Building, etc., Real accounts can be further classified into tangible and intangible.
(a) Tangible Real Accounts: These accounts represent assets and properties which can be seen, touched, felt, measured, purchased and sold. e.g. Machinery account Cash account, Furniture account, stock account etc.
(b) Intangible Real Accounts: These accounts represent assets and properties which cannot be seen, touched or felt but they can be measured in terms of money. e.g., Goodwill accounts, patents account, Trademarks account, Copyrights account, etc.
The rule for Real accounts is: Debit what comes in Credit what goes out

I hope ur query is resolved.

Thanks & Regards

Shankar Singh

Goodwill is real account

Goodwill is real account

Thank u for ur prompt reply.

Can u plz explain me how to use the rule for Real accounts ie "Debit what comes in Credit what goes out"  for intangable accounts as i m confused b'coz such items do not hv any physical existence.

Dear Angel,

Read with attention of underline words

Real Account: All Asset Accounts It Includes both Tangible assets like Cahs, car, Furniture and Intagible assets Like Goodwill, Patents.

The Accounting rule for Real Account is Debit What Comes In and Credit What Goes Out.

So as per the rule of Real account when you buy something(assets) you must debit the same and Give credit to the party or cash/ Bank what the case may be.

Assets includes phisical or non physical.

dont get confused with Physical or non Physical.

If any further clarificatio required let me know i will try to resolve the same.

Thanks

Shankar

Read more: https://wiki.answers.com/Q/What_are_the_various_examples_of_nominal_real_and_personal_accounts#ixzz1xSvTLWzA

Thank you very much..!!

What is the journal entry?