WAEC Accounting Past Questions & Answers - Page 89

In accounting, nominal accounts are the general ledger accounts that are closed at the end of each accounting year. As a result, the nominal accounts are also referred to as temporary accounts. The closing process also means that each nominal account will start the next accounting year with a zero balance. Nominal Accounts are accounts related and associated to losses, expenses, income or gains.Examples include purchase account, sales account, salary A/C, commission A/C etc.

The sales and receipts classes of transactions are the typical journal entries, that debit accounts receivable (debtors) and credit sales revenue, and debit cash and credit accounts receivable  in which the amount owed will be paid at a later date. 

Books of original entry refers to the accounting journals in which business transactions are initially recorded. They include;

1. Sales journal
2. purchase day book
3. returns inwards
4. returns outwards
5. cash book
6. general ledger

Accounting and journal entry for credit sales include 2 accounts, debtor and sales. In case of a journal entry for cash sales, cash account and sales account are used. The person who owes the money is called a “debtor” and the amount owed is a current asset for the company. Since the goods were sold on credit, debtor acount will be debited (increase in the amount of money being owed to the business), and sales account will be credited.

Examples of real accounts are:

• Cash.
• Accounts receivable.
• Fixed assets.
• Accounts payable.
• Retained earnings.