Account

A systematic record of financial transactions that tracks specific assets, liabilities, equity, revenues, or expenses within an organization's accounting system. Each account serves as a distinct category for recording similar transactions, providing a detailed view of how specific aspects of a business's finances change over time. The account structure forms the foundation of the double-entry bookkeeping system.

Take a retail business's inventory account, which tracks the value of goods available for sale. When new inventory arrives, the account is debited to show an increase in assets. As items are sold, the account is credited to reflect the reduction in inventory value. This ongoing record helps managers track stock levels, make purchasing decisions, and identify potential shrinkage or inventory management issues.

Proper account management requires understanding account types (real vs. nominal), classification (asset, liability, equity, revenue, expense), and their relationships within the chart of accounts. Each account's balance affects financial statements differently, and the choice of when to create new accounts versus using sub-accounts impacts financial reporting granularity and analysis capabilities.