Is Dividend A Nominal Real Or A Personal Account

Dividend Is Which Type Of Account In Accounting

As we know that Dividends are shares of distributions paid to shareholders calculated from Net Income / Net Profit for the year.

Dividend account is a Personal Account as it is a Contra Equity Account which is deducted from Retained Earnings Account by transferring it to Retained Earnings Account in order to calculate ending equity. It is very important to note that Dividend is a Balance Sheet Account but still it is considered as a temporary account and not permanent account as it is closed to retained earnings account during closing entry process.

Is Dividend A Permanent Account Or Temporary Account

It is a Temporary Account as it is closed to retained earnings so, it is not a Permanent Account.

Dividend account is not a nominal account as it is neither an expense account nor a revenue account. Actually, it is a contra equity account which is deducted from equity.

Dividend is also not considered as a real account as it is not an asset or a liability. Eventhough, it is a balance sheet account but not an asset or a liability as it is a contra equity account.

So, we can conclude that a dividend account is a personal account as well as a Temporary Account in accounting, but it is not a permanent Account as it is closed to Retained Earnings Account.