Organization - The organisational accounting system...

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The organisational accounting system provides information in the form of ledger accounts maintained in the books of accounts. The additional information that is needed is obtained by deriving it from the information that is existing in these ledger accounts. • Information relating to Profits The ledger accounts relating to the organisation are classified into three types. Personal, Real and Nominal. » Nominal Accounts Nominal accounts are related to expenses, losses, incomes and gains. Since ascertaining profits or losses involves dealing with incomes, gains, expenses and losses we can conclude that all the nominal accounts together would give us the information relating to the profits or losses made by the organisation. » Trading and Profit and Loss Accounts To derive the information relating to profits from these nominal accounts a ledger account by name "Trading and Profit & Loss a/c" is prepared.
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