Nominal Account

What is a Nominal Account?

Nominal accounts include all income and expenditure accounts such as the rent expense, insurance expense, payroll, and revenue accounts and in addition, also include dividend accounts.

Nominal accounts are temporary as they only last for an accounting period. At the end of the accounting period, the balance is transferred to the retained earnings account using closing journal entries and the account is closed with a zero balance. At the start of a new accounting period, an account will be opened only if there are transactions relating to that account.

For further information see the Wikipedia definition.

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Nominal Account March 23rd, 2016Team

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