Which of the following is not a real account?

In the traditional classification of ledger accounts, every account is grouped as personal, real, or nominal. Personal accounts relate to individuals, firms, or organisations that the business owes money to or is owed money by. Nominal accounts record income and expenses, such as rent, wages, or commission. Real accounts record the tangible assets that a business owns and can physically possess, such as land, buildings, motor vehicles, machinery, and furniture; the golden rule applied to them is "debit what comes in, credit what goes out."

A motor vehicle account, a building account, and a furniture account each represent a physical, tangible asset that the business can see and touch, so each is a real account.

A patent, by contrast, is an intangible asset. It represents a legal right to exclusive use of an invention or process rather than a physical object, so it does not fit the traditional definition of a real account built around tangible property. A patent account is more appropriately treated as representing intangible fixed assets, which are kept separate in classification from the tangible real accounts.

Because it lacks physical substance while the other three accounts represent items the business can physically hold, the patent account is the one that is not a real account.

Examination tip: when a question separates "real" from other assets, check whether the item is physical property (real account) or an intangible legal right, such as a patent, trademark, or goodwill.