Question

For each of the following accounts, identify whether it is nominal/temporary or real/permanent, and whether it is reported on the balance sheet or the income statement?

Answer 1

Deposits and loans receivable are real/permanent accounts reported on the balance sheet, while interest income and salaries expense are nominal/temporary accounts reported on the income statement.

Step-by-step explanation:

For the accounts mentioned, we need to identify whether they are nominal/temporary or real/permanent and whether they are reported on the balance sheet or the income statement.

1. Deposits: Deposits are considered real/permanent accounts because they represent the bank's liabilities to its customers. They are reported on the balance sheet.
2. Interest Income: Interest income is a nominal/temporary account because it represents revenue generated by the bank. It is reported on the income statement.
3. Loans Receivable: Loans receivable is a real/permanent account as it represents an asset of the bank. It is reported on the balance sheet.
4. Salaries Expense: Salaries expense is a nominal/temporary account as it represents an expense incurred by the bank. It is reported on the income statement.