Definition of Account in plain English

Account is an accounting term and to know about what is account is very necessary who's duty to maintain accounts and also those who have no background of accounting .

Account may be defined T form table which tells us detail of specific accounting events which happen due to happening of transactions . In other words , account tells us what amount , we have to pay , what amount , we have to get , what is the total amount in bank or in hand .

Every account of ledger has capacity to tell specific information which is useful for businessman .
In general word journal entries's debit account will go to the credit side of credit account

Ram purchased good from sham on credit $ 10000 and after two days he pays same amount . Its journal entry will in books of Ram

Purchase account Debit $ 1000

Sham account Credit $ 1000

After 2 days

Sham account debit $ 1000

Bank account credit $ 1000

Now , Ram will open three account

1. Sham Account

Purchase account will be written its credit side

bank account will be written its debit side

2. Purchase account

sham account will be written its debit side

3. Bank account

sham account will be written its credit side

From above example , we get idea that in journal's debit account will go to credit side of credit account and every credit account of journal entry will go to debit side of debit account .

I also explain Account with one more example . For instance businessman wants to know what is the amount which is not received from debtor and has become totally bad debts . If accountant did not make the accounts properly , he will not in a capacity to answer businessman's question but , if accountant has made all accounts by proper journal entries , then total Amount which is transfer to profit and loss account as loss is the bad debts account which shows his bad debts account . This account also explains that which debtor did not pay and what amount he did not pay .
After deep study of Accounts , account manager can explain revenue and financial position of business . It is true that these days , we need not make accounts manually , every software makes it automatically , after passing voucher entries . But it is also true , importance of account is still important as in old time accounting system . Accounts also useful way to study the business , its transactions and its nature and if you have power to watch every account of business , you can get answer of many new questions which the financial statements are not shown . This is the reason , every business concern maintains his old years accounts . You have gone to bank and if you demand last five year his bank account's statement . He will also responsible to give to you because every bank maintains his customers account and provide information of account under right to get information .






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Accounting Education: Definition of Account in plain English
Definition of Account in plain English
Accounting Education
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