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
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
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
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
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 §
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 §
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]