Classification of Accounts - Nominal or Fictitious Accounts

Nominal or Fictitious Accounts:

Nominal or fictitious accounts are accounts of the expenses and losses which a concern incurs, and incomes and gains which a concern earns in the course of its business. These accounts are called nominal accounts, as they exist only in name and cannot be seen or touched.

Nominal accounts may be:

a. Revenue accounts or incomes accounts, i.e., accounts of revenues, incomes, gain or profits, such as commission earned, interest received, discount received, etc.

b. Expense accounts, i.e., accounts of expenses or losses, such as salaries paid, rent paid, discount allowed, bad debts, etc.