ACCOUNT, a term of very various use in book-keeping, bank ing and stock exchange terminology (see BANKING AND CREDIT) indicating counting, reckoning, especially of moneys paid and received, hence a statement made as to the receipt and payment of moneys. The following are some of its chief usages Balanced account, an account in which the total debits equal the total credits and which has been ruled off to indicate that fact.
Balancing account, an account contained in a subsidiary ledger which shows in aggregate and also in reverse, as to debit and credit, the total of the detail accounts. The use of such an ac count makes a ledger self-balancing. The information contained in a balancing account is essentially that found in a controlling account although the debits and credits appear in reversed order in the balancing account.
Closed account, same as balanced account (q.v.).
Contra account, an account of contrary tendency which must be considered with another account because of an interlocking relationship. For example, a customer of a business may also be a creditor. If the amount he owes as a customer is less than the amount that is due him as a creditor, the business may remit a check for the net amount. The term used in referring to the amount due from the customer in this case is contra account.
Controlling account, an account in the general ledger which re flects in aggregate the details of two or more accounts of the same tendency. Ordinarily the underlying accounts are operated in a subsidiary ledger.
Impersonal account, an account which is not a personal account (q.v.). Any expense or income account is an impersonal account.
Mixed account, an account containing two or more separate classes of transactions. The "merchandise account," for example, contains a record of purchases, sales, purchase returns, purchase allowances, sales returns, sales allowances, freight and cartage, etc. In modern accounting, a separate account called a simple account is maintained for each class of transactions.
Nominal account, an account which reflects a .change in the financial condition of a business. Thus, it is an account which finally finds its way into the profit and loss account; e.g., sales, purchases, interest, discount, salaries, wages, commission and advertising expense. All of the accounts appearing in a statement of income, and profit and loss, are nominal accounts.
Open account, an account which is not in balance, i.e., an account containing a debit or a credit excess; opposite of closed account.
Personal account, an account operated under the name of an individual, an organization or a business enterprise.
Private Account, an account maintained in a Private Ledger. Information of a confidential nature which ought to be shown on the accounting records can best be treated in the private set of accounts.
Real account, an account used in displaying the financial status of a business. All accounts used in a "balance sheet" are real accounts; thus they represent assets, liabilities and capital.
Simple account, an account containing entries relating to a single class of transactions; opposite of mixed account. Sales returns, purchase allowances, interest on notes receivable and administrative salaries are simple accounts. (See ACCOUNTANCY