Question

A receipts and payments account is a nominal account. Justify a reason either for or against.

Answer 1

Against:

1. A Receipts and Payments Account is not a nominal account; it is a real account.
2. This account records all cash transactions, including receipts and payments, regardless of the accounting period to which they correspond.
3. It records the real movement of cash into and out of the organization.
4. Nominal accounts, on the other hand, account for revenue, expenses, gains, and losses and are closed at the end of each accounting period. Because the Receipts and Payments Account handles cash transactions (real assets), it is regarded as a real account.