Question

Select the most appropriate answers from the alternatives given below and rewrite the sentences.

Income and Expenditure Account is a ______________.
a) capital account
b) real account
c) personal account
d) nominal account

Answer 1

Income and Expenditure Account is a nominal account.

Explanation: In this account, only revenue items are recorded, while capital items are ignored. It is prepared to ascertain the results of operating activities of the business over a period of time. All revenue items, i.e. both income and expenses, are recorded in it. Thus, it is treated as a nominal account.