Glossary · Also called General ledger
Nominal ledger
The main ledger holding the impersonal accounts such as sales, purchases and expenses.
What it means
The ledger containing the nominal (impersonal) accounts, income, expenses, assets and liabilities other than personal accounts.
Example
The rent, sales and purchases accounts live in the nominal ledger.
Why it matters
It provides most of the figures used to prepare the financial statements.
In practice
The nominal ledger, sometimes called the general ledger, holds every impersonal account. These include sales, purchases, returns, each class of expense, income items, and the capital and drawings accounts. The trial balance is drawn mainly from it, and its balances feed directly into the income statement and the statement of financial position. It sits alongside two personal ledgers, the sales ledger and the purchases ledger, which hold the individual accounts of customers and suppliers.
Imagine a business makes a credit sale of RM400. The customer's own account is updated in the sales ledger. The RM400 of income goes to the sales account in the nominal ledger. The two are checked against each other through control accounts.
Students often confuse the nominal ledger with the sales ledger. The nominal ledger holds impersonal accounts, the categories of income, expense, asset and capital. The sales and purchases ledgers hold personal accounts, the amounts owed by or to named customers and suppliers.
If the different ledgers blur together for you, one of our teachers can map each transaction to its ledger with you. Book a trial class.
Related terms
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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