Question

Life Insurance Premium A/c is _________.

• A. Nominal
• B. Personal
• C. None of the above
• D. Real

Answer 1

Answer: (B)

The nominal accounts are all hose accounts that are in the nature of incomes and expenses of a business. These accounts are closed at the financial year end with the income and expense summary to arrive at the net profit or loss account. Nominal accounts start at the year end with zero balance (or no balance) and ends with no balance to carry forward (as all is transferred to income summary).

Life insurance premium is classified as a personal account, since the insurance premium paid represents the amount paid for an individual.