Nominal Accounts

Earlier we learned that the Nominal Ledger should always balance and that this is checked by adding up the Debit and Credit columns of it. These columns are made up of individual entries called Nominal Accounts. Each Nominal Account holds a balance value for a particular financial aspect of the business, such as sales, carriage, rent, bank balance and so on.

Most Nominal Accounts are designated to either the Debit or Credit column in advance, regardless of the balance (balances can be positive or negative). For example, the Bank Balance Nominal Account usually appears in the Debit (Left) column where as a sales account, say "Widget Sales" would appear in the Credit (Right) column.

Now, before any transactions take place in the business, it follows that all Nominal Accounts would have a balance of zero regardless of whether they appeared in the Debit or Credit Column. Therefore, adding up both columns would yield zero for both so, it balances with a zero on both sides.

Now if we sold a widget for £10 and put the money straight into the bank (via a PDQ) then the Credit value of the "Sales Widgets" Account would increase by £10 because we have sold £10 worth. Also, the Debit value of the "Bank Account" Nominal would increase by £10 because we now have £10 in the bank. Add up both sides and we get £10 in each - it balances!

This is, in essence, how the Nominal Accounts keep the whole Nominal Ledger balanced. With this in mind, you should now start to think of how you would structure the db table to accommodate the Nominal Accounts.