State whether the following statements are True or False with reasons.
1) Outstanding expense is nominal account.- False.
Reason: Outstanding expense is Personal A/c
2) Capital account is a real account. – False.
Reason: Capital account is a Personal account.
3) Every debit has equal and corresponding credit.- True.
Reason: Every Transaction has two effect.
4) Discount received is a nominal account.- True.
Reason: Discount Received is a gain earned by the business at the time of Purchase. Hence it is a nominal A/c.
5) Drawings account is a nominal account.- False.
Reason : Drawing account is a Personal account.
6) Outstanding salary is a nominal account.- False.
Reason: Outstanding salary is a Personal A/c.
7) Loan account is personal account.- True
Reason: Loan account is related to Individual human being. Thus it is a personal account.
8) Goodwill account is a real account.- True.
Ans: Goodwill is an intangible asset, Hence it is Real account.
9) Trade discount account is a nominal account.- True.
Reason: Trade discount account is a nominal account
10) Personal transactions of proprietor are recorded in the books of account of business.- False.
Reason: Only Business transactions are recorded in the books of account.
11) Motor car account is a Real Account.- True
Reason: Motor car is a tangible Asset, Hence it is Real A/c.
12) The rule of Nominal Account in Debit the receiver and Credit the giver.- False.
Reason: The rule of Nominal Account is:
Debit all Expenses and Losses
Credit All Income and Gains.
13) Bank loan account is a Nominal account.- False
Reason: Bank loan is Personal Account.
14) Assets = Capital + Liabilities – True
Reason: Accounting equation signifies that assets of a business are always equal to the total of its Liabilities and Capital.
15) Trademark account is a personal account.- False.
Reason: Trademark is a Real A/c.