Question

State whether the following statement are True or False.

Trading account is a nominal account.

Answer 1

True

Explanation: All the direct expenses related to production are debited, while the incomes (i.e. sales) are credited in the Trading Account. As per the rule of nominal account, all the expenses/losses must be debited and all the incomes/gains must be credited. This rule is also followed while preparing a Trading Account. Therefore, it is regarded as a nominal account.