The rule for real accounts is ___________.
A
debit the receiver, credit the giver
B
debit what comes in, credit what goes out
C
debit all expenses and losses, credit all incomes and gains
Correct option is B. debit what comes in, credit what goes out
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 or intangible.
1. Tangible real accounts: These accounts represent assets and properties which can be seen, touched, felt, measured, purchased and sold. For e.g. Cash account., Machinery account, etc.
2. 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. For e.g. Trademark account, Patent account, etc.
The rule for Real accounts is: Debit what comes in; Credit what goes out