NOMINAL ACCOUNTS - Accounts and Finance for Managers

This is an account deals with the amount of expenses incurred or incomes earned. It includes all expenses and losses as well as incomes and gains of the enterprise. This nominal account records the expenses and incomes which are not carried forwarded to near future.
The process of the accounting in normal practice as follows:
The practice starts with the journalizing of entries. After journalisation, the entries passed in the journal will be passed into the ledger A/c. The immediate next stage is to prepare the trial balance.
What is meant by the journal entry ?
It is an entry systematically recorded to the tune of golden rules of accounting in the journal book is known as journal entries.
How the journal entries are entered?
The journal entries are recorded in the sequential order. The order of recording is conventionally done on the basis of date. The journal entry usually contains two different parts, which are nothing but two different accounts affecting the transactions.


Journalising the entries are different from one transaction to another The difference is only due to nature and characteristics of the transactions. To journalise as easy as possible, the systematic approach to be adopted to post the transactions without any ambiguity.

Journalising can be generally categorized into following various categories.

  • Taking place within the same natured accounts
  • Taking part in between accounts of two different in categories

First, we will discuss the journalizing of entries of the same natured accounts. This can be classified into various segments

  • Transactions only in between the personal accounts
  • Transactions only in between the real accounts

Under the category of transactions which affect only the personal accounts are as follows:

  • Between the persons of the nature
  • Between the persons of the artificial relationship
  • Between the persons of Representations

What are the points to observed at the moment of journalizing ?

  • The nature of the accounts to be identified
  • The accounts to be correlated to the golden rules
  • Once the accounts are finalized, the next stage is to pass the entry through proper debiting and crediting of the accounts respectively.

The meaning of the transaction should be made explicit for easier understanding through brief and catchy narration to follow as well as evade the ambiguity in near future.
Mr Sundar is a debtor who has paid Rs 1,500, in the bank A/c


  • Transaction is identified which is in between two different persons under the personal A/c, they are nothing but persons of nature.
  • The benefits are shared in between two persons viz. Mr. Sundar and Banker who are nothing but giver and receiver of the benefits respectively.
  • It means that Sundar is the giver of Rs 1,500 to Banker who is the receiver of the same Rs. 1,500.NOMINAL-ACCOUNTS

Final step is to pass the journal entry
Bank A/c Dr Rs. 1,500
To Sundar A/c Cr Rs. 1,500
(Being cash is paid by sundar to Bank A/c)

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