Question

why nominal accounts are not balanced

experts answer

Answer 1

Nominal accounts relate to expenses , losses , gains , revenues , etc . In such accounts the transaction is recorded for just one fiscal year and At the end of an accounting year the balance in these accounts are transferred into a permanent account (Capital A/c , profit and loss account etc) which resets the balance of nominal accounts to zero . The nominal accounts are not balanced as the expenses are a charge against the profit of that year only and the gains are an addition to the profits of that specific year. Hence they are not to be balanced but transferred to the profit and loss account .