10 Examples of Real Accounts: Assets, Liabilities, and Equity

In accounting, you deal with a variety of accounts to balance and organize your books. One account type that you are likely to come across is a real account. Today we will learn different examples of real accounts.

What Is a Real Account?

A real money account is an account that keeps its ending balance and rolls over at the end of the year. These amounts then become the beginning balances of the next period.

The areas on the balance sheet where real accounts are located are assets, liabilities, and equity. Real accounts also include contra asset, contra liability, and contra equity accounts, as these accounts retain their balances beyond the current fiscal year.

Real accounts are not reflected in the income statement. All balances in the income, expense, profit, and loss accounts (known as nominal accounts or temporary accounts) listed in the income statement are removed to retained earnings at the end of each financial year, resulting in an opening balance of zero in these accounts from the beginning of the next financial year.

Since retained earnings are a real account, this means that the balances of all nominal accounts are ultimately transferred to one real account.

Examples of Real Accounts

The real accounts are the balance sheet accounts, which include:

Asset accounts (cash, accounts receivable, buildings, etc.)
Liability accounts (notes payable, accounts payable, wages payable, etc.)
Stockholders’ equity accounts (common stock, retained earnings, etc.)

#1. Asset accounts

Asset accounts are categories within the business’s books that show the value of what it owns.

All the business organization’s resources that are owned by the organization and have a monetary value that can be used to generate revenue and is also available to pay the organization’s liabilities are business assets. The assets are further divided into two different categories:

Tangible assets: The assets that can be seen or touched are considered tangible assets. Fixed assets include cash, furniture, fixtures, buildings, machinery, etc.
Intangible Assets: The various assets that cannot be felt or touched are considered intangible assets. Examples of intangible assets are patents, goodwill, trademarks, etc.

Examples of Asset Accounts:

Some examples of asset accounts include cash, accounts receivable, inventories, prepaid expenses, investments, buildings, equipment, vehicles, goodwill, and more.

Two asset accounts, allowance for doubtful accounts and accumulated depreciation, are referred to as contra-asset accounts because these accounts are expected to have a credit balance.

#2. Liability accounts

A liability is something that a person or company owes, usually a sum of money. Liabilities are settled over time by the transfer of economic benefits such as money, goods, or services.

Liabilities listed on the right side of the balance sheet include loans, trade payables, mortgages, deferred income, bonds, guarantees, and accrued expenses.

Liabilities can be compared to assets. Liability relates to things you owe or borrow; Assets are things you own or owe.

Examples of liabilities are payable on loans, payables for goods and services which also include creditors, payables on bills of exchange, etc.

#3. Stockholder’s Equity Accounts

Shareholders’ Equity is the value of assets available to the company’s shareholders after payment of the liability due.

Examples of shareholders’ equity accounts are retained earnings, common stock, etc.