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ACCOUNT

account,n.1.ACCOUNTING(3) <the principal filed an action for account against his agent>.

— Also spelled (archaically) accompt.

“The action of account lies where one has received goods or money for another in a fiduciary

capacity, to ascertain and recover the balance due. It can only be maintained where there is such a

relationship between the parties, as to raise an obligation to account, and where the amount due is

uncertain and unliquidated.” Benjamin J. Shipman, Handbook of Common-Law Pleading § 56, at

144 (Henry Winthrop Ballantine ed., 3d ed. 1923).

2.ACCOUNTING(4)  <the  contractor  filed  an  action  for  account  against  the  nonpaying

customer>.3. A statement by which someone seeks to describe or explain an event <Fred’s account

of  the  holdup  differed  significantly  from  Martha’s>.4.  A  detailed  statement  of  the  debits  and

credits  between  parties  to  a  contract  or  to  a  fiduciary  rela-tionship;  a  reckoning  of  monetary

dealings < the trustee balanced the account at the end  of each  month>. • In wills and  estates, an

account  is  a  brief  financial  statement  of  the  manner  in  which  an  executor  or  administrator  has

performed the official duties of collecting the estate’s assets and paying those who are entitled. An

account  charges  the  executor  or  administrator  with  the  value  of  the  estate  as  shown  by  the

inventory,  plus  any  increase,  and  credits  the  executor  with  expenses  and  costs,  duly  authorized

disbursements, and the executor’s commission. — Abbr. acct.; a/c. — Also termed accounting. See

STATEMENT  OF  ACCOUNT.  5.  A  course  of  business  dealings  or  other  relations  for  which

records must be kept <open a brokerage account>.

account in trust.An account established by an individual to hold the account’s assets in trust

for someone else. [Cases: Trusts    34.]

account payable.(usu. pl.) An account reflecting a balance owed to a creditor; a debt owed by

an  enterprise  in  the  normal course  of  business  dealing.  —  Often  shortened  to  payable. —  Also

termed note payable. Pl. accounts payable.

account receivable.(usu. pl.) An account reflecting a balance owed by a debtor; a debt owed

by  a  customer  to  an  enterprise  for  goods  or  services. —  Often  shortened  to  receivable. —  Also

termed note receivable. Pl. accounts receivable.

account  rendered.An  account  produced  by  the  creditor  and  presented  for  the  debtor’s

examination and accep-tance.

account settled.An account with a paid balance.

account  stated.  1.  A  balance  that  parties  to  a  transaction  or  settlement  agree  on,  either

expressly or by implication. • The phrase also refers to the agreement itself or to the assent giving

rise to the agreement.

“An account stated is a manifestation of assent by debtor and creditor to a stated sum as an

accurate computation of an amount due the creditor.” Restatement (Second) of Contracts § 282(1)

“If a creditor and a debtor wish to compromise or liquidate a disputed or unliquidated debt,

they may do so by either a substituted contract or an accord. If, however, their agreement is in the

nature of a computation, it is called an account stated. An account stated, then, is a manifestation

of  assent  by  both  parties  to  the  stated  sum  as  an  accurate  computation  of  the  debt.”  E.  Allan

Farnsworth, Contracts § 4.24, at 286 (1982).

2.  A  plaintiff’s  claim  in  a  suit  for  such  a  balance.  3.Equity  practice.  A  defendant’s  plea  in

response  to  an  action  for  an  accounting.  •  The  defendant  states  that  the  balance  due  on  the

statement of the account has been  discharged and that the defendant holds the  plaintiff’s release.

— Also termed stated account.

accumulated-adjustments  account.Tax.  An  item  on  the  books  of  an  S  corporation  (usu.  an

equity item on the corporation’s balance sheet) to account for taxable-income items passed through

to shareholders, such as accumulated earnings — earned before the corporation converted from a

C  corporation  to  an  S  corporation  —  that  would  have  been  distributed  as  a  dividend  to  the

shareholders if the corporation had remained a C corporation. • One of the theories underlying the

accumulated-adjustments  account  is  that  the  shareholders  should  not  be  permitted  to  avoid

dividend-tax  treatment  on  a  corporation’s  accumulated  earnings  just  because  the  corporation

converts from C status to S status. IRC (26 USCA) § 1368(e)(1). — Abbr. AAA. [Cases: Internal

Revenue    3896. C.J.S. Internal Revenue §§ 376–377.]

adjunct account.An account that accumulates additions to another account.

annual account.See intermediate account.

assigned account.A pledge of an account receivable to a bank or factor as security for a loan.

[Cases: Assignments    10; Pledges    5; Secured Transactions    181. C.J.S. Assignments §§ 19–21;

Pledges § 8; Secured Transactions §§ 25, 134–136.]

bank  account.A  deposit  or  credit  account with  a  bank,  such  as  a  demand,  time,  savings,  or

passbook account. UCC § 4-104(a). [Cases: Banks and Banking    151. C.J.S. Banks and Banking

§§ 266–268, 277–278.]

blocked account.An account at a bank or other financial institution, access to which has been

restricted either by the government or by an authorized person. • An account may be blocked for a

variety of reasons, as when hostilities erupt between two countries and each blocks access to the

other’s  accounts. —  Also  termed  frozen  account. [Cases: Banks and  Banking    128,  151.  C.J.S.

Banks and Banking §§ 266–268, 270, 277–278, 280–282, 327.]

book  account.A  detailed  statement  of  debits  and  credits  giving  a  history  of  an  enterprise’s

business transactions.

capital account.An account on a partnership’s balance sheet representing a partner’s share of

the partnership capital. [Cases: Partnership    81. C.J.S. Partnership §§ 91, 336, 340.]

charge account.See CHARGE ACCOUNT.

client trust account.See CLIENT TRUST ACCOUNT.

closed account.An account that no further credits or debits may be added to but that remains

open for adjustment or setoff.

community  account.An  account  consisting  of  community  funds  or  commingled  funds.  See

COMMUNITY PROPERTY.

contra account (kon-tr<<schwa>>). An account that serves to reduce the gross valuation of an

convenience account.An apparent joint account, but without right of survivorship, established

by  a  creator  to  enable  another  person  to  withdraw  funds  at  the  creator’s  direction  or  for  the

creator’s  benefit.  •  Unlike  a  true  joint  account,  only  one  person,  the  creator,  has  an  ownership

interest in the deposited funds. Convenience accounts are often established by those who need a

financial  manager’s  help  and  want  to  make  it  easy  for  the  manager  to  pay  bills.  Although  the

manager’s name is on the account, he or she does not contribute any personal funds to the account

and can write checks or make withdrawals only at the direction of or on behalf of the creator.

current account. 1. A running or open account that is settled periodically, usu. monthly. 2. A

partner’s account that reflects salary, withdrawals, contributions, and other transactions in a given

period.  3.Banking.  A  depositor’s  checking  account.  4.  The  portion  of  a  nation’s  balance  of

payments that represents its exports, imports, and transfer payments.

custodial  account.An  account  opened  on  behalf  of  someone  else,  such  as  one  opened  by  a

parent  for  a  minor  child.  •  Custodial  accounts  most  often  arise  under  the  Uniform  Transfers  to

Minors Act (1983). All states have enacted either that act or its earlier version, the Uniform Gifts

to Minors Act. Property can be set aside by a donor or transferred to a third party as custodian for

the benefit of a minor, usu. as an irrevocable gift. This is a much simpler mechanism than a trust.

The  custodian  has  powers  and  fiduciary  duties  similar  to  those  of  a  trustee,  except  that  the

custodian is not under a court’s supervision. The custodian must account for the property and turn

it  over  to  the  beneficiary  when  he  or  she  reaches  majority.  See  UNIFORM  TRANSFERS  TO

MINORS ACT.

deposit  account.A  demand,  time,  savings,  passbook,  or  similar  account  maintained  with  a

bank,  savings-and-loan  association,  credit  union,  or  like  organization,  other  than  investment

property  or an account evidenced by an instrument. UCC § 9-102(a)(29). — Abbr. D.A. [Cases:

Banks and  Banking    151; Building  and  Loan  Asso-ciations    40.  C.J.S. Banks and  Banking  §§

266–268, 277–278; Building and Loan  Associations, Savings and Loan Associations, and Credit

Unions §§ 66, 68, 71–79.]

escrow account. 1. A bank account, generally held in the name of the depositor and an escrow

agent, that is returnable to the  depositor  or paid to a third  person  on the fulfillment  of specified

conditions.  —  Also  termed  escrow  deposit.  See  ESCROW(2).  [Cases:  Deposits  and  Escrows

11–26. C.J.S. Depositaries §§ 4–5, 8–10, 13–25, 27; Escrows §§ 2–15.] 2. See impound account.

frozen account.See blocked account.

impound  account.An  account  of  accumulated  funds  held  by  a  lender  for  payment  of  taxes,

insurance, or other periodic debts against real property. — Also termed escrow; escrow account;

reserve account. See ESCROW(2).

intermediate  account.An  account  filed  by  an  executor,  administrator,  or  guardian  after  the

initial account and before the final account. • This account is usu. filed annually. — Also termed

annual account.

joint  account.A  bank  or  brokerage  account  opened  by  two  or  more  people,  by  which  each

party has a present right to withdraw all funds in the account and, upon the death of one party, the

survivors become the owners of the account, with no right of the deceased party’s heirs or devisees

to  share  in  it.  •  Typically,  the  account-holders  are  designated  as  “joint  tenants  with  right  of

survivorship”  or  “joint-and-survivor  account-holders.”  In  some  juris-dictions,  they  must  be  so

designated to establish a right of survivorship. — Abbr. JA. — Also termed joint-and-survivorship

account. [Cases: Joint Tenancy    1. C.J.S. Estates § 19; Joint Tenancy §§ 2, 4, 7–9.]

lien account.A statement of claims that fairly informs the owner and public of the amount and

nature of a lien. [Cases: Liens    9; Mechanics’ Liens    116. C.J.S. Liens § 10; Mechanics’ Liens §

121.]

liquidated  account.An  account  whose  assets are  clearly  ascertained,  either  by  agreement  of

the parties or by law.

long account.An account involving  numerous items or complex transactions in an equitable

action, usu. referred to a master or commissioner.

margin account.A brokerage account that allows an investor to buy or sell securities on credit,

with the securities usu. serving as collateral for the broker’s loan.

multiple-party  account.An  account  that  has  more  than  one  owner  with  a  current  or  future

interest in the account. • Multiple-party accounts include joint accounts, payable-on-death (P.O.D.)

accounts, and trust accounts. Unif. Probate Code § 6-201(5).

mutual  account.An  account  showing  mutual  transactions  between  parties,  as  by  showing

debits and credits on both sides of the account.

“[E]ach party to a mutual account occupies both a debtor and creditor relation with regard to

the  other  party.  A  mutual  account  arises  where  there  are  mutual  dealings,  and  the  account  is

allowed to run with a view to an ultimate adjustment of the balance. In order to establish a mutual

account, it is not enough that the parties to the account have cross demands or cross open accounts;

there  must  be  an  actual  mutual  agreement,  express  or  implied,  that  the  claims  are  to  be  set  off

against each other.” 1 Am. Jur. 2d Accounts and Accounting § 6, at 564 (1994).

mutual-fund  wrap  account.An  investment  account  that  allocates  an  investor’s  assets  only

among mutual funds rather than stocks or other investments. See wrap account.

negotiable-order-of-withdrawal account.See NOW account.

nominal  account  (nahm-<<schwa>>-n<<schwa>>l).  An  income-statement  account  that  is

closed into surplus at the end of the year when the books are balanced.

NOW  account  (now).  An  interest-bearing  savings  account  on  which  the  holder  may  write

checks. — Also termed negotiable-order-of-withdrawal account. [Cases: Banks and Banking    151.

C.J.S. Banks and Banking §§ 266–268, 277–278.]

offset account.One of two accounts that balance against each other and cancel each other out

when the books are closed.

open account. 1. An unpaid or unsettled account. 2. An account that is left open for ongoing

debit and credit entries by two parties and that has a fluctuating balance until either party finds it

convenient to settle and close, at which time there is a single liability.

partial account.A preliminary accounting of an executor’s or administrator’s dealings with an

estate.  [Cases:  Executors  and  Administrators    509(11).  C.J.S.  Executors  and  Administrators  §

883.]

pay-on-death  account.A  bank  account  whose  owner  instructs  the  bank  to  distribute  the

account’s  balance  to  a  beneficiary  upon  the  owner’s  death.  •  Unlike  a  joint-and-survivorship

account, a pay-on-death account does not give the beneficiary access to the funds while the owner

is alive. — Abbr. POD account. — Also termed pay-on-death bank account.

pledged  account.A  mortgagor’s  account  pledged  to  a  lender  in  return  for  a  loan  bearing

interest at a below-market rate. [Cases: Pledges    5. C.J.S. Pledges § 8.]

profit-and-loss  account.A  transfer  account  of  all  income  and  expense  accounts,  closed  into

the retained earnings of a corporation or the capital account of a partnership. [Cases: Corporations

311; Partnership    81. C.J.S. Corporations §§ 505–506; Partnership §§ 91, 336, 340.]

real account.An account that records assets and liabilities rather than receipts and payments.

reserve account.See impound account.

revolving charge account.See revolving credit under CREDIT(4).

running account.An open, unsettled account that exhibits the reciprocal demands between the

sequestered account.An account (such as a joint bank account) that a court has ordered to be

separated, frozen, and impounded.

share-draft  account.An  account  that  a  member  maintains  at  a  credit  union  and  that  can  be

drawn on through the use of share drafts payable to third parties. • A share-draft account operates

much like a checking account operates at a bank. — Also termed share account. [Cases: Building

and   Loan   Associations     40.  C.J.S.  Building  and   Loan   Associations,   Savings  and   Loan

Associations, and Credit Unions § 66.]

suspense   account.A   temporary   record   used   in   bookkeeping   to   track   receipts   and

disbursements of an uncertain nature until they are identified and posted in the appropriate ledgers

and journals. • A suspense account does not appear in a final financial statement. It is a useful tool

when,  for  example,  a  lump-sum  receipt  or  expenditure  must  be  broken  down  to  match  several

transactions before posting.

tax-deferred account.An interest-bearing account whose earnings are not taxable as income to

the account holder before the earnings are withdrawn. • Tax-deferred accounts include most types

of  IRAs,  variable  annuities,  401(k)  plans,  cash-value  life  insurance,  and  most  other  types  of

tax-deferred savings instruments.

trust account.See CLIENT TRUST ACCOUNT.

wrap account.An investment account for which the investor, helped by a stockbroker, selects

an account manager and pays a fee based on a percentage of the total assets to be managed. • Most

wrap  accounts  contain  a  portfolio  of  investments,  including  stocks,  bonds,  and  cash.  Investors

generally provide a risk profile but do not select the investments or give instructions to buy or sell.

— Also termed wrap-fee account. See mutual-fund wrap account. [Blacks Law 8th]