Skip to content

CSEET · Fundamentals of Accounting · Basic Concepts and Principles of Accounting

Under the traditional (British) classification of accounts, which of the following is a nominal account?

Discount allowed account is a nominal account because it represents an expense or loss of the business. Nominal accounts deal with expenses, losses, incomes and gains, whereas outstanding salary, advance rent received and prepaid insurance represent liabilities or assets and are not nominal accounts.

  1. AOutstanding salary account
  2. BRent received in advance account
  3. CDiscount allowed accountCorrect
  4. DPrepaid insurance account

Explanation

Nominal accounts relate to expenses, losses, incomes and gains. Discount allowed is a loss/expense of the business, so it is nominal. Outstanding salary and rent received in advance are liabilities, and prepaid insurance is an asset, so these are personal or real accounts, not nominal.

Did you get it right without looking?

One question tells you little. A timed set on Basic Concepts and Principles of Accounting shows your real accuracy, how long you take and where you lose marks.

Practise Basic Concepts and Principles of AccountingFree diagnostic mock

More Basic Concepts and Principles of Accounting questions