Real Account

What is a Real Account?

A real account sometimes referred to as a permanent account is an account classification in double entry bookkeeping.

Real accounts include balance sheet accounts such as assets, liabilities and equity and are considered permanent because they are not closed at the end of each accounting period.

At the start of the new accounting period, the ending balance from the previous accounting period is brought forward and becomes the new beginning balance on the account.

An example of a permanent account is the fixed assets account.

It should be noted that accounts which represent an individual or an organisation are classified as personal accounts and not real accounts. For example, the petty cash account is a real account, whereas the bank account with ABC bank is a personal account as it represents the balance with an organization.

For further information see the Wikipedia Real Account definition.

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Last modified March 23rd, 2016 by Team

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