Question

Profit and loss account is a nominal account. (State True or False)

Answer 1

yes
profit and loss are nominal account

Answer 2

Answer:

True

Explanation:

As per the question

Profit and Loss account is a Nominal Account, not a Real Account.

Nominal Account related to income /gains and expenses/losses of a business. For example: salary, rent commission, etc. Whereas Real account is that which related to assets of an organisation. For example: Land and Building, Machinery etc.

Profit and Loss accounts is an account in a book of an organisation to ascertain net profit or loss for a particular period of time or net result of a business. All expenses/losses are recorded on the debit side and Income/gains are recorded on the credit side of Profit and Loss account. If the total of debit side exceeds it means an organisation has incurred a loss where credit side exceeds it means profit made by an organisation. The exceed amount always transferred to a Balance Sheet.

Each Nominal account is transferred to Profit and Loss account. Profit and Loss account is an income statement.