A nominal ledger is a book or file where a company keeps all records of accounting transactions. A company uses the nominal ledger to check that every debit entry has a corresponding credit entry, ensuring that the account is balanced.
A nominal ledger is divided into separate nominal accounts. Each nominal account is given a nominal code, which is used to identify that specific account. Transactions are then recorded using the code, allowing businesses to track individual areas of the ledger, rather than having just an overview. This lets the business see which areas are turning a profit and which are netting a loss.