A type of account (a general ledger account/ GL account) that closes at the end of each accounting year. Basically, an entity records accounting transactions in a nominal account for one accounting year. At the end of the accounting year, the balances in the account are transferred to a permanent account (real account).

A nominal account serves as a repository of transaction data for an accounting period of usually one year. Nominal accounts are temporary in nature because these accounts are zeroed out at the end of the accounting year with the transfer completing at the time. Therefore, these accounts begins the next period with a zero balance.

Nominal accounts are mainly income statement accounts. All accounts that are temporary (e.g., revenue and expense accounts) are nominal accounts (see: examples of nominal accounts). Even for accounts created during the closing process of certain accounts, are also temporary in nature and have to be closed at the end of an accounting year, such as a dividends account.

A nominal account is also called a temporary account.