Which accounts are classified as nominal accounts?

Nominal accounts are temporary accounts used to record incomes, expenses, gains, and losses during an accounting period. Their balances are transferred to the Profit and Loss Account at the end of each financial year, after which they are reset to zero for the next period.

Major Classifications of Nominal Accounts

1. Expense Accounts
   • These record the costs incurred by a business.
   • Examples:
     • Salary Account
     • Rent Account
     • Wages Account
     • Advertising Expense Account
     • Electricity and Telephone Expense Account
     • Depreciation Account
2. Loss Accounts
   • Represent any financial losses to the business.
   • Examples:
     • Bad Debts Account
     • Loss on Sale of Asset Account
     • Discount Allowed Account
     • Theft or Damage Loss Account
3. Income Accounts
   • Record revenues earned during the accounting year.
   • Examples:
     • Commission Received Account
     • Interest Received Account
     • Rent Received Account
     • Dividend Income Account
4. Gain Accounts
   • Represent incidental profits not part of regular operations.
   • Examples:
     • Profit on Sale of Fixed Asset Account
     • Discount Received Account
     • Gain on Foreign Exchange Account