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A real account is the branch of accounts that doesn’t close at the end of period or every year or else it is carried forward to the next year as the opening account balance of any company or business entity.
In simple words, such account stayed open allowing companies to accumulate their balances and carry forward it to the next year which is every year during the lifetime or existence of the company or business entity.
Real accounts are prepared to give ease in management working as they can compare the ongoing accounts of the company with initial accounts or balances of the previous accounting year.
Thus, with changing accounting year the balance of the ongoing financial year will become the initial balance for the next financial and the rest process is continued same as before every year.
The balances of these ledger accounts are transferred or carried to permanent account i.e.
Shareholders equity account– It includes retained earnings and other comprehensive accounts related to stock.
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