Accounting




April 25, 2007

What is a nominal account in accounting?

Nominal accounts in accounting are the temporary accounts, such as the income statement accounts. In other words, nominal accounts are the accounts that report revenues, expenses, gains, and losses. (The owner’s drawing account is also a temporary account, even though it is not an income statement account.)

Nominal or temporary accounts are closed at the end of each accounting year. This means that their account balances are transferred to a permanent account. This closing process allows the nominal accounts to start the next accounting year with zero balances.

The balances from the income statement accounts will end up in the owner’s equity account, if the enterprise is a sole proprietorship. If the business is a corporation, the balances will end up in the retained earnings account.

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Comments

12 Responses to “What is a nominal account in accounting?”

  1. musheer on January 2nd, 2008 11:34 am

    about accounting type question

  2. Rate of Depreciation-assets wise on January 3rd, 2008 5:16 am

    sir,

    please give me the details of rate of Depreciation for assets

  3. savitha on January 11th, 2008 4:18 am

    sir

    give more details about general ledger

  4. ajay sharma on February 22nd, 2008 5:58 am

    sir

    please tell me whether Outstanding expenses are nominal account or not.

  5. vani on April 24th, 2008 2:19 am

    Sir,
    what is debited and credited in nominal account

  6. gufran on May 5th, 2008 1:53 am

    Sir,

    I finish my graducation in 1995
    Actually i am B.A (History,Economics,English) student.
    Now i am studing in accounts.
    can you solved my problems.
    Please give the details of general account.
    Thankyou sir

  7. pradip001 on July 22nd, 2008 7:47 am

    is “purchase” nominal Account?

  8. preetpal on August 24th, 2008 10:46 am

    INFORMATION ABOUT NOMINAL ACCOUNT

  9. charlez on September 18th, 2008 8:10 am

    give us some information about stock taking and stock management

  10. VENKATESH on October 3rd, 2008 6:56 am

    what is the nominal Account

  11. avnish kumar on November 18th, 2008 3:44 am

    sir,
    I finished my graduation and i now i an persuing MCA from IEC cet GREATER NOIDA . I hsve some problem to identify nominal account .
    please make me uderstand about nominal account.

  12. Maimai on November 22nd, 2008 11:11 am

    sir,
    i need help in nominal account!!
    i get confused between it and real account

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