General Rules Applied to Three Kinds of Accounts: 3. Nominal or Fictitious Accounts:

General Rules Applied to Three Kinds of Accounts: 3. Nominal or Fictitious Accounts:

Nominal or Fictitious Accounts:

     Nominal accounts may be expenses and losses, or incomes and gains for the business. Therefore, the account of an expense or loss of the business should be debited, and the account of an income or gain of the business should be credited.

     The rule for debiting and crediting nominal accounts may be explained with the help of the following examples:

     1. Paid rent Rs.100.
     In this transaction, the nominal account involved is Rent Account. Rent paid is an expense for the business.

     2. Paid salary Rs.500.
     Here, the nominal account involved is Salary Account. Salary paid is an expense for the business. Therefore, Salary Account has to be debited.

     3. Received commission Rs.100.
     In this transaction, the nominal account involved is Commission Account. Commission received is an income for the business. So, Commission Account has to be credited.

     4. Received interest on bank deposit Rs.100.
     The nominal account involved in this transaction is Interest Account. Interest received is an income for the business. So, Interest Account has to be credited.