Corporate Fin Mgt NDLM.PDF

3 Nominal Account: The nominal account is based on the following principles, namely:

? Debit all expenses or losses

? Credit all gains or income

Rent, salaries, wages, Printing, Stationery, discount, coolie charges, discount, travelling
expenses, commission etc., are some of the nominal accounts.

Example 2:
Nominal Account

Mr. ‘X’ paid rent of Rs.200 to Mr. ‘Y’ in cash.

In the books of Mr. 'X’ debit the rent account and credit the cash account
and
In the books of Mr. ‘Y’ debit the cash Account and credit the rent account

Note: - In case of fully paid cash transactions personal accounts will not be affected. If
cash is due and not paid, then personal accounts will be affected.

In this example, ‘rent account’ is a nominal account and the ‘cash account’ is an asset
account.

5. Accounts Book

5.1. The following are the important accounts books that shall be maintained

(1) Cash Book

(2) Purchase Book

(3) Purchase returns Book

(4) Sales Book

(5) Sales returns book

(6) Bills Receivable Book

(7) Bills Payable Book

(8) Journal Proper

5.1.1. Cash Book: There are many types of cash books, but our focus will be

on cash book with ‘Cash, Bank and discount columns’ on both sides.

Both sides mean one on ‘debit side’ and the other on ‘credit side’.

5.1.2. It must be ensured that the postings in cash book are made correctly

before the cash book is signed daily. Following are the important

points to be seen.

? The receipts will be entered on the debit side