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Simple English definitions for legal terms
real account
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A quick definition of real account:
A real account is a type of accounting record that keeps track of assets and liabilities, like money you owe or things you own. It's different from other types of accounts that track money coming in and going out. Real accounts help you keep track of what you own and what you owe, so you can manage your finances better.A more thorough explanation:
A real account is a type of accounting record that tracks assets and liabilities rather than receipts and payments. It is used to keep track of a company's financial position and is important for creating financial statements.
Examples of real accounts include:
- Accounts payable: a record of money owed to creditors
- Accounts receivable: a record of money owed to the company by customers
- Capital account: a record of a partner's share of the partnership's capital
For example, a company's accounts payable real account would show how much money the company owes to its suppliers. This information is important for creating a balance sheet, which shows the company's assets and liabilities.