Differences between Personal Accounts and Nominal Accounts:

Differences between Personal Accounts and Nominal Accounts:

     The main differences between personal accounts and nominal accounts are:

     1. Personal accounts are accounts of persons with whom a business deals. But nominal accounts are accounts of expenses and losses, and incomes and gains of a business.

     2. At the end of every accounting year, personal accounts are balanced, and their balances are carried from one year to another. On the other hand, at the end of every year, nominal accounts are not balanced, but are closed by transfer to trading account or profit and loss account.

     

     3. As the balances of personal accounts are carried from one year to another, real accounts exist year after year. But as the nominal accounts are closed at the end of every year, they do not exist year after year.

     4. Personal accounts are items of balance sheet, whereas nominal accounts are items of trading account or profit and loss account.

     5. Personal accounts may appear either on the assets side or on the liabilities side of the balance sheet. But real accounts will appear on the assets side of the balance sheet.