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stationery account why is called nominal account why its not called real account​

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Home » Accounting Resources » Bookkeeping Resources » Nominal Account

Nominal Account

Dheeraj Vaidya, CFA, FRM

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Dheeraj Vaidya, CFA, FRM

What is the Nominal Account?

Nominal Accounts are accounts related and associated with losses, expenses, income, or gains. Examples include a purchase account, sales account, salary A/C, commission A/C, etc. The outcome of a nominal account is either profit or loss, which is then ultimately transferred to the capital account.

The nominal account is an income statement account (expenses, income, loss, profit). It is also known as a temporary account, unlike the balance sheet account ( Asset, Liability, owner’s equity), which are permanent accounts.

So nominal accounting starts with a zero balance at the start of every accounting year. Then during the period, it accumulates all the gains and losses and returns to zero balance at the end of every accounting year by transferring/paying the amount/ balances to a permanent account.