bhavani sankar accounts are not categorised on the basis of tangibility,
assets and liabilities real,
expenses losses and incomes gains are nominal
Then Patent is a Nominal Account?? #bhavanishanker
Accounts
Page no : 2
CA Srujann kumar Reddy
(Asst Manager(Internal audit))
(1679 Points)
Replied 13 July 2016
welcome kushwanth...
CA Srujann kumar Reddy
(Asst Manager(Internal audit))
(1679 Points)
Replied 13 July 2016
patent is an intangible asset, it is a real account not a nominal, if it is nominal why we capitalise intangible assets and amortise as per AS 26
Vinayak Gurav
(Sr. Accountant Off)
(77 Points)
Replied 13 July 2016
how the spare purchase is nominal a/c if is related to assets I,e machinery..etc
CA Srujann kumar Reddy
(Asst Manager(Internal audit))
(1679 Points)
Replied 14 July 2016
depends on purchase, if it is a consumable spare then consume as expenditure and becomes nominal and a capital or insurance spare then capitalise it and becomes real account, refer accounting standard interpretation 10 for AS-2 and AS-10
Asma ali
(Student)
(39 Points)
Replied 14 July 2016
Purchase is a nominal account while goods is a a part of real account...
bhavani shanker
(article)
(82 Points)
Replied 14 July 2016
Don't worry! here is the answer
under american Approach or modern approach
purchase of goods --->means goods coming inside ,increase in stock(asset) belongs to real account
under British Approach or Double Entry System
purchase of goods --->treated as expense(nominal) because purchases should transfer to trading p&l account, now you need to decide whether it should be in trading p&l or not
CA Srujann kumar Reddy
(Asst Manager(Internal audit))
(1679 Points)
Replied 14 July 2016
good one bhavani shankar, Thanks for sharing, so we follow the second one.
Kanak
(CA Final)
(106 Points)
Replied 14 July 2016
Dear Kushwanth,
Purchase Account is Nominal Account. Purchases are treated as expenses. As per Golden Rules of Accounting for Nominal Accounts (i.e., Debit all expenses and losses, Credit all incomes and gains), we debit purchase account because it is an expense. One should not be confused between Purchases and Stock. Stock Account is real account. Trading Account reflects adjusted purchases.
Stock is unspent purchases or Unsold Output.
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