Question

Audit Fees Account is ________.

• A. Real
• B. Personal
• C. Nominal
• D. All of the above

Answer 1

The correct option is C Nominal

As per various laws, the audit of accounts is being done by the competent and professionally qualified persons. The audit of accounts record is done by qualified accountants and authorized by the concerned government . For example, cost audit is done by cost accountant, statutory audit and tax audit is done by chartered accountants, etc/. These professionals charge their fees for auditing of accounts. The amount, which is paid to the auditors for auditing the accounts, is called as audit fees.

Representative account are related to expenses, losses, incomes or gains are called as nominal accounts. The dictionary meaning of the word "nominal" is "existing in name only" and the meaning remains absolutely true in accounting senses too, because nominal accounts do not exist in physical form, but behind every nominal account money is involved. The final result of all nominal accounts is either profit or loss which is then transferred to the capital account.

Golden rule for nominal accounts is: Debit all expenses and losses; Credit all incomes and gains.

Examples of nominal accounts are Audit Fees A/c, Purchase A/c, Salary A/c, Sales A/c, etc.