Answer Each of the Following Questions (A-C)with a Separate Short

question 7

Essay

Answer each of the following questions (a-c)with a separate short paragraph per question.
​
(a)What is the difference between a real account and a nominal account? Give an example of each type of account.Why is this distinction important for the closing process?
(b)What two purposes are served in making closing entries?
(c)Why is the Dividends account closed directly to Retained Earnings rather than to the Income Summary account?

---

Definitions:

Domestic Subsidies

Financial supports provided by a government to local businesses or sectors to boost their competitiveness or manage the cost of their products and services.

Import Licensing

A governmental procedure requiring a permit or license to be obtained before goods can be imported into a country, often used to control the volume of imports.

Investment Securities

Financial instruments that can be bought, sold, or traded, such as stocks, bonds, or options.

Foreign Stocks

Shares of companies that are based outside of an investor's own country, offering a way to gain exposure to international markets and diversify investment portfolios.