As we know
Nominal Account is a Account Has All Information about Nominal Expenses
and Incomes.
For examples, Salary, Wages, Electricity, profits, Gains, Rent, Interests, etc.
In Nominal Account there is two transactions, One is Incomes and Other is Expenses.
According to the Accounting System, Expenses is always Debit & Income is Always credit.
Eg;
1. Albert Mobile House Electricity Expenses of March $500
1. Albert Mobile House Electricity Expenses of March $500
Journal Entry in Format of Journal
Date | Particulars | Ledger folio | DEBIT ($) | CREDIT ($) |
Mar-31 | Electricity Expenses A/c .……DR To Cash A/c (To Indicates CR) (Being Electricity Expenses paid) | 500/- | 500/- | |
Total | 500/- | 500/- | ||
NOTE:- | In the Journal Electricity Expenses Account is debited because, Formula of Nominal Account Says, All Expenses Are Debit. & In the Journal Cash Account is credited because, When we paid cash, Cash goes out, so the formula of Real account Says What goes out CR. so Cash Account is Credited. |
2. Albert Mobile house Interest on Investment $ 1000
Date | Particulars | Ledger folio | DEBIT ($) | CREDIT ($) |
Jan-5 | Cash A/c ……… To Interest on Investment A/c(To Indicates CR) (Being Furniture Sold ) | 1000/- | 1000/- | |
Total | 1000/- | 1000/- | ||
NOTE:- | in the Journal Cash Account is debited because, when Interest on Investment Received, Cash comes to us, so the formula of Real account Called What comes in DR. so Cash Account is Debited. & In the Journal Interest on Investment Account is credited because, Formula of Nominal Account Says, All Incomes Are Credit. |
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