New Enroll in our GIC Finance Online Course Here!

    Register

    Question

    The accounting rule, "Debit all ___________, credit all

    gains & income" pertains to ____ accounts.
    A losses & expenses, real Correct Answer Incorrect Answer
    B losses & expenses, nominal Correct Answer Incorrect Answer
    C expenses & assets, real Correct Answer Incorrect Answer
    D capital & drawings, nominal Correct Answer Incorrect Answer
    E expenses and assets, nominal Correct Answer Incorrect Answer

    Solution

    The accounting general rule for recording financial transactions of nominal accounts in double-entry bookkeeping is "Debit all losses & expenses, credit all gains  &  income."    Nominal accounts are temporary accounts, recording and keeping track of your profits, revenues, expenses, losses. Debiting losses  and  expenses  represents  an  increase  in  these accounts, reflecting the use of assets or incurring of liabilities, while crediting gains and income accounts represents an increase in owners' equity through earned revenue or financial gains. This method ensures accurate and balanced financial records.

    Practice Next

    Relevant for Exams: