BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Accounts relating to income, revenue, gain, expenses and losses are termed as nominal accounts. These accounts are also known as fictitious accounts as they do not represent any tangible asset. A separate account is maintained for each head or expense or loss and gain or income.

Detailed explanation-2: -The nominal account is an income statement account (expenses, income, loss, profit). It is also known as a temporary account, unlike the balance sheet account ( Asset, Liability, owner’s equity), which are permanent accounts. So nominal accounting starts with a zero balance at the start of every accounting year.

Detailed explanation-3: -The income and expenditure account is prepared by the non-trading entities to determine surplus or deficit of income over expenditures for a particular time frame.

Detailed explanation-4: -All revenue and expense accounts are nominal accounts. The major difference between these two types of accounts is that the balances of nominal accounts zero out at the end of each accounting period and do not accrue like the balances of real accounts.

Detailed explanation-5: -A nominal account is also known as a temporary account.