Justify a reason :A Receipts and Payments Account is a nominal account

1.	Justify a reason :A Receipts and Payments Account is a nominal account.
Answer» Receipts and Payment Account as the name suggests contains details of cash received (CAPITAL OR REVENUE) and cash payments made (CAPITAL OR REVENUE) during an accounting period. It is similar to a CashBook of a Non Profit making Organization. It basically records the inflows and outflows of cash and bank balances which infact are themselves REAL in nature. Just take the example of Profit and Loss Account. It closes all the Nominal Accounts at the end of the year and thereby acquires the nature of a NOMINAL ACCOUNT. The same logic applies to receipts and payments account as well.

Justify a reason :A Receipts and Payments Account is a nominal account.

Answer»

Receipts and Payment Account as the name suggests contains details of cash received (CAPITAL OR REVENUE) and cash payments made (CAPITAL OR REVENUE) during an accounting period.

It is similar to a CashBook of a Non Profit making Organization. It basically records the inflows and outflows of cash and bank balances which infact are themselves REAL in nature.

Just take the example of Profit and Loss Account. It closes all the Nominal Accounts at the end of the year and thereby acquires the nature of a NOMINAL ACCOUNT.

The same logic applies to receipts and payments account as well.

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