What is a nominal ledger?
A nominal ledger is the central accounting record that holds every financial transaction a business makes, summarised by account. Sales, purchases, cash, payroll and stock all post into it, and the balances on those accounts are what produce the trial balance, profit and loss account and balance sheet. In UK practice “nominal ledger” and “general ledger” mean the same thing.
Also called General ledger, GL
What sits in a nominal ledger
The nominal ledger is organised by account rather than by customer or supplier. Each account holds one kind of value — sales, rent, wages, bank, VAT — and every transaction posts a debit to one account and a matching credit to another. The list of those accounts is the chart of accounts.
Accounts fall into two families, and the split is what makes the ledger produce two different reports from one set of entries:
- Balance sheet accounts — assets, liabilities and equity. These carry their balance forward from one year to the next: the bank account, debtors, creditors, fixed assets, share capital.
- Profit and loss accounts — income and expenses. These are cleared to zero at year end, which is what "nominal" originally referred to: accounts that exist in name only across periods.
A worked example
Suppose you invoice a customer £1,000 plus £200 VAT. Three accounts in the nominal ledger move at once:
- Debtors (balance sheet) is debited £1,200 — the customer now owes you that.
- Sales (profit and loss) is credited £1,000 — the revenue you have earned.
- VAT control (balance sheet) is credited £200 — money you are holding for HMRC.
How it relates to the sales and purchase ledgers
The sales and purchase ledgers hold the detail: which customer owes what, which supplier invoice is unpaid, when each falls due. The nominal ledger holds the totals. Post a sales invoice and the sales ledger records it against that customer while the nominal ledger records it against Debtors and Sales.
That is why the two must agree. The total of the sales ledger balances should equal the Debtors control account in the nominal ledger. When they do not, something has been posted to the control account directly instead of through the ledger, and the difference has to be found before the accounts can be trusted.
Nominal ledger and trial balance
They are not the same thing. The nominal ledger is the record; the trial balance is a snapshot of it. A trial balance lists every nominal account and its balance at a point in time, with debits in one column and credits in the other. If the two columns agree, the double entry is arithmetically consistent — though that alone does not prove the entries were posted to the right accounts.
What this looks like in an accounting system
In a working system the nominal ledger is not something anyone posts to by hand very often. Every other module posts into it automatically — a sales invoice, a supplier payment, a stock movement — and the ledger itself is where the exceptions are handled: journals, corrections, accruals and prepayments, and anything that falls outside the trading flow.
Around that sit the jobs that only make sense at ledger level:
- Recurring postings — rent, depreciation, standing journals — generated automatically on a schedule rather than keyed monthly.
- Bank reconciliation, increasingly fed by an Open Banking connection rather than a manually imported statement.
- Inter-company processing, where a transaction in one company raises the matching entry in another.
- Period close, run in module order so nothing can be posted back into a closed period once the accounts are agreed.
Nominal ledger questions.
Is a nominal ledger the same as a general ledger?
Yes. "Nominal ledger" is the common term in UK practice and "general ledger" is the American equivalent, and UK accounting software uses both. They describe the same record.
What does "nominal" mean in accounting?
It refers to accounts that exist in name only across periods — income and expense accounts, which are cleared to zero at year end rather than carried forward. The name stuck to the whole ledger even though it also holds balance sheet accounts that do carry forward.
What are examples of nominal accounts?
Sales, purchases, rent, wages, insurance, motor expenses, bank interest and depreciation are all nominal accounts. Each records one category of income or cost, and each is cleared to the profit and loss account at the end of the financial year.
Which accounts are not kept in the nominal ledger?
Individual customer and supplier accounts are not. Those live in the sales and purchase ledgers, and reach the nominal ledger only as summary totals through the debtors and creditors control accounts.
What is a nominal code?
A nominal code is the reference number given to each account in the chart of accounts — 4000 for sales, 7000 for wages, and so on. Posting to a nominal code is how a transaction is filed to the right account.
Nominal Ledger
See a general ledger that every other module posts into automatically — with recurring journals, a full cash book, Open Banking reconciliation and an ordered period close.
Explore the Nominal LedgerNext in the glossary.
What is a chart of accounts?
A chart of accounts is the complete list of accounts a business can post transactions to, each with its own code.
Read the definition →What is a sales ledger?
A sales ledger is the record of everything each customer has been invoiced and everything they have paid, kept account by account.
Read the definition →What is a purchase ledger?
A purchase ledger is the record of everything each supplier has invoiced you and everything you have paid them, kept account by account.
Read the definition →