What types of transactions are recorded in nominal accounts?
Question: What types of transactions are recorded in nominal accounts?
Nominal accounts, also known as income statement accounts, record transactions related to revenues, expenses, gains, and losses. Specifically, the following types of transactions are recorded in nominal accounts:
Revenues: These are earned income from the sale of goods or services.
Expenses: These are costs incurred in the normal course of business, such as rent, salaries, utilities, and supplies.
Gains: These are increases in equity resulting from transactions outside the normal course of business, such as the sale of a fixed asset.
Losses: These are decreases in equity resulting from transactions outside the normal course of business, such as the loss from a natural disaster or theft.
Overall, nominal accounts help to determine a company's profitability by recording its revenues, expenses, gains, and losses for a particular period.
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