Accounts

• According to real accounts principle, when an
assets is received by the business, the asset
account is to be debited, when any asset goes
out of the business, the asset account is to be
credited.

• For example:

Purchased office furniture for Rs. 10,000.

• In this transaction office furniture (asset –

Real A/c) is coming in and cash (asset – Real

A/c) is going out. Hence, office furniture

account is to be debited and cash account is to

be credited. Mr. John Pradeep Kumar, KJC

Nominal Accounts

(Expenses, Losses, Incomes, Gains)

• Accounts which are related to expenses, losses,
incomes or gains are called Nominal accounts.

• Nominal accounts do not really exist in physical form,
but behind every nominal account money is
involved.

• E.g. Purchase A/C, Salary A/C, Sales
A/C, Commission received A/C, etc.

• The final result of all nominal accounts is either profit
or loss which is then transferred to the capital
account.

Mr. John Pradeep Kumar, KJC

Rule : Debit all Expenses and Losses.
Credit all Incomes and Gains.

• According to normal account principle,
expenses and losses are to be debited and all
incomes and gains of the business are to be
credited.

E.g. Salaries paid Rs. 5000
• In this transaction salaries (expenditure-

nominal A/c) is an item of expenditure and
cash (real A/c) is going out.

Mr. John Pradeep Kumar, KJC