Nominal Account Law and Legal Definition

Nominal account means an income statement account that is related with losses, expenses, income, and gain. Generally, a nominal account is a temporary account that marks revenue and expenses appearing on the income statement. A nominal account will be closed at a surplus at the end of each accounting year when the books are balanced. Upon closure, the account balances in the nominal account will be transferred to a permanent account. This closing process helps the nominal account start with a zero balance the next accounting year. Examples of nominal accounts are rent accounts or salary accounts. A nominal account is also called a temporary account.