Accounting · Types of Accounts
In the double-entry system of bookkeeping, accounts are categorized as Personal, Real, or Nominal. Which of the following statements accurately describes the nature and treatment of a Nominal Account?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1These accounts are used solely for recording automated reversal transactions and are cleared daily through the clearing house.
- 2These accounts represent expenses, losses, incomes, or gains; they are temporary and are closed at the end of the accounting period by transferring them to the Profit and Loss Account.✓
- 3These accounts relate to persons or legal entities and are governed by the rule: Debit the Receiver, Credit the Giver.
- 4These accounts represent tangible and intangible assets, and their balances are carried forward to the Balance Sheet.
Correct answer
These accounts represent expenses, losses, incomes, or gains; they are temporary and are closed at the end of the accounting period by transferring them to the Profit and Loss Account.
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