Why rule of nominal account is exactly opposite with the rule of personal and real account?

Showing Answers 1 - 0 of 0 Answers

Mohamed Gazzali

  • Oct 9th, 2011
 

The reason why rule of nominal account is opposite with the rule of personal and real account is that Nominal Accounts CANNOT be SEEN & TOUCHED. So it has a different application in Accounting logic.

Here I wish to demystify the Accounting Rule & explain all the 3 accounting rules so that you & the rest of the readers may understand the accounting logic and learn themselves and even teach to others. If a person knows these rules then they can be very easily an accounting personnel (Not an Accountant). Chartered Accountants and Cost & Management Accountants are a step forward profession but are of Very high Standing with in depth knowledge in application of Accounting rules & logic in consistence with prevailing Company Laws & Accounting Standards.

1. Personal Account:

Debit the Receiver FROM the company
Credit the Giver TO the company

2. Real Account:

Debit what COMES-IN TO the company
Credit what GOES-OUT FROM the company

3. Nominal Account:

Debit all EXPENSES & LOSES TO the company
Credit all INCOMES / REVENUES & GAINS TO the company

If you see the 3rd Nominal Account all rules talk about what happens TO THE COMPANY'S BUSINESS - while the rest of the rules Personal & Real has what coming-in & going out and who gives & receives to & from the company. Hope the above helps you & all.

Give your answer:

If you think the above answer is not correct, Please select a reason and add your answer below.

Answer Question

Click here to Login / Register your free account


 
Send   Reset

 

Related Answered Questions

 

Related Open Questions