Nominal Accounts
Nominal Accounts are basic tools that bookkeepers and accountants use to track money coming in (income) and going out (expenses) of a business. Think of them like organized folders where you sort different types of transactions - one folder for sales income, another for rent payments, another for utility bills, and so on. These accounts are temporary, meaning they get cleared or 'reset' to zero at the end of each financial year, unlike accounts that track what you own (assets) or owe (liabilities). When you see this term in someone's resume, it shows they understand how to properly categorize and record different types of business transactions.
Examples in Resumes
Managed Nominal Accounts and prepared monthly financial statements for 15 small businesses
Set up and maintained Nominal Accounts in QuickBooks for a retail business
Reconciled Nominal Accounts and Revenue Accounts on a quarterly basis
Trained junior staff in proper Nominal Account classification and management
Typical job title: "Bookkeepers"
Also try searching for:
Where to Find Bookkeepers
Professional Networks
Online Communities
Example Interview Questions
Senior Level Questions
Q: How would you explain the relationship between nominal accounts and the profit & loss statement?
Expected Answer: A senior bookkeeper should explain that nominal accounts form the basis of the profit & loss statement, with income accounts showing revenue and nominal expense accounts showing costs, ultimately revealing the business's profitability over a specific period.
Q: How do you handle year-end closing procedures for nominal accounts?
Expected Answer: They should describe the process of transferring balances from nominal accounts to the income summary account, ensuring all transactions are properly recorded, and closing these accounts to start fresh in the new financial year.
Mid Level Questions
Q: What's the difference between nominal accounts and real accounts?
Expected Answer: Should explain that nominal accounts track income and expenses and are temporary (reset yearly), while real accounts track assets, liabilities, and capital and carry forward their balances to the next year.
Q: How do you ensure nominal accounts are properly categorized?
Expected Answer: Should discuss the importance of consistent transaction categorization, using proper account codes, and regular review of entries to ensure accuracy in financial reporting.
Junior Level Questions
Q: Can you give examples of different types of nominal accounts?
Expected Answer: Should be able to list basic examples like rent expense, utility expenses, sales revenue, and service income accounts.
Q: How do you record a basic expense in a nominal account?
Expected Answer: Should explain the simple process of recording an expense transaction, including date, amount, and proper categorization in the correct expense account.
Experience Level Indicators
Junior (0-2 years)
- Basic transaction recording
- Understanding of income and expense categories
- Simple account reconciliation
- Basic bookkeeping software usage
Mid (2-5 years)
- Advanced categorization of transactions
- Monthly closing procedures
- Financial statement preparation
- Multiple client account management
Senior (5+ years)
- Complex accounting procedures
- Team supervision and training
- Year-end closing processes
- Advanced financial analysis
Red Flags to Watch For
- Unable to explain basic differences between income and expense accounts
- Confusion about when to use nominal vs. real accounts
- No experience with common accounting software
- Poor understanding of basic bookkeeping principles
Related Terms
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