Understanding Nominal and Real Accounts

What is a nominal account used for in accounting?

• To track permanent assets

• To track financial transactions over a specific period

• To calculate taxes

• To manage inventory

Which of the following is an example of a nominal account?

• Cash

• Revenue

• Accounts Receivable

• Equipment

At the end of the accounting year, where is the balance in a nominal account transferred?

• To another nominal account

• To a real account

• To a tax account

• To a liability account

What type of account is used to determine a company's assets, liabilities, or owner's equity?

• Nominal account

• Real account

• Temporary account

• Expense account

Which of the following statements is true about real accounts?

• They start each accounting year with a zero balance

• They are temporary accounts

• They carry their balance over to the next accounting year

• They are used to track financial transactions over a specific period