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CMA Foundation · Fundamentals of Financial and Cost Accounting · Accounting Cycle

Under the traditional (golden) rules of debit and credit, which rule applies to a nominal account?

For nominal accounts, all expenses and losses are debited and all incomes and gains are credited. The other rules relate to real accounts (what comes in and goes out) and personal accounts (receiver and giver), so they do not describe nominal accounts.

  1. ADebit what comes in, credit what goes out
  2. BDebit the receiver, credit the giver
  3. CDebit all expenses and losses, credit all incomes and gainsCorrect
  4. DDebit all incomes and gains, credit all expenses and losses

Explanation

For nominal accounts the rule is to debit expenses and losses and credit incomes and gains. 'Debit what comes in, credit what goes out' applies to real accounts, and 'debit the receiver, credit the giver' applies to personal accounts.

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