Account

Business, Legal & Accounting Glossary

Definition: Account


Account


What is the dictionary definition of Account?

Dictionary Definition


A written list of transactions, noting money owed and money paid; a detailed statement of mutual demands arising out of a contract or a fiduciary relationship.


Full Definition of Account


In accountancy, an account is a label used for recording and reporting a quantity of almost anything. Most often it is a record of an amount of money owned or owed by or to a particular person or entity, or allocated to a particular purpose. It may represent amounts of money that have actually changed hands, or it may represent an estimate of the values of assets, or it may be a combination of these.

An account can simply list payments, losses, sales, debits, credits, and other monetary transactions, or it may go further and show a balance or the results of comparing opposite transactions, like purchases and sales. Businesspersons keep accounts; attorneys may keep escrow accounts; and executors must keep accounts that record transactions in administering an estate.

Types Of Accounts

  • Asset accounts: represent the different types of economic resources owned by a business, common examples of Asset accounts are cash, cash in the bank, building, inventory, prepaid rent, goodwill, accounts receivable.
  • Liability accounts: represent the different types of economic obligations by a business, such as accounts payable, bank loan, bonds payable, accrued interest.
  • Equity accounts: represent the residual equity of a business (after deducting from Assets all the liabilities) including Retained Earnings and Appropriations.
  • Revenue or Income accounts: represent the company’s gross earnings and common examples include Sales, Service revenue, and Interest Income.
  • Expense accounts: represent the company’s expenditures to enable itself to operate. Common examples are electricity and water, rentals, depreciation, doubtful accounts, interest, insurance.
  • Contra-accounts: from the term contra, meaning to deduct, the value of which are opposite the 5 above-mentioned types of accounts. For instance, a contra-asset account is Accumulated depreciation. This label represents deductions to a relatively permanent asset like Building.

Account represents financial and non-financial transactions of a firm, to know the total outcome of the investment made by investors.


Account FAQ's


What is an Account?

An account is a record in an accounting system that tracks the financial activities of a specific asset, liability, equity, revenue, or expense. These records increase and decrease as the business events occur throughout the accounting period. Each individual account is stored in the general ledger and used to prepare the financial statements at the end of an accounting period.

There are five main types of accounts used in an accounting system.

Each of these are represented in the expanded accounting equation. Assets = Liabilities + Owner’s Equity + Revenues – Expenses.


Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/account/
Modern Language Association (MLA):
Account. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
August 17, 2022 https://payrollheaven.com/define/account/.
Chicago Manual of Style (CMS):
Account. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/account/ (accessed: August 17, 2022).
American Psychological Association (APA):
Account. PayrollHeaven.com. Retrieved August 17, 2022
, from PayrollHeaven.com website: https://payrollheaven.com/define/account/

Definition Sources


Definitions for Account are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 28th December, 2021 | 0 Views.