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ITS REAL ACCOUNT
ANSWER A
a) Nominal
Prepaid expenses are Real Account
Prepaid expenses are future expenses that have been paid in advance. You can think of prepaid expenses as costs that have been paid but have not yet been used up or have not yet expired.
Answer D.
Real Account as it comes in Balance sheet under the Current Assets. The concerned prepaid expense will be deducted from the related expense in the profit & loss account in order to identify the actual expenses related to that year .
Regards,
Joshi Mathew
Certified Internal Auditor #1036906
Answer is D "Real Account"
Justification
Prepaid Expenses are Assets.
There are mainly three types of accounts.
1. Real Accounts.
2. Personal Accounts.
3. Nominal Accounts.
This classification is based on the nature of accounts i.e. asset, liability, legal entity,expenses, incomes etc.
Real Accounts
Accounts related to assets (tangible or intangible) come under the category of real accounts e.g. land, furniture, machinery, goodwill, patents etc are real accounts.
Personal Accounts.
Accounts related to persons (living ar non living) are called personal accounts. In business we have to deal with a number of persons. Some are living like us and some are artificial which do not have a living existence but have a separate legal existence.Thus in accountancy we classify persons into Natural Persons and Artificial Person.
Natural persons are the persons who are living e.g. Rahul, Mohit, Sam, Peter etc.
Artificial persons are all the firms, companies, institutions with whom you deal.
Nominal Accounts
These are the accounts related to incomes and expenditures of a business entity.
Answer D : real account
answer is D
