An account is a fundamental component in accounting that records and summarizes all financial transactions related to a specific item, such as assets, liabilities, equity, revenue, or expenses. Each account tracks changes in value over time, providing a clear and organized way to monitor an organization’s financial activity.

Accounts are organized within the general ledger, which forms the basis for preparing key financial statements like the balance sheet and income statement. For example, cash, accounts receivable, inventory, and salaries expense are all different types of accounts, each documenting a specific category of financial data.

Each account typically includes a debit and credit side, following the double-entry bookkeeping system, where every transaction affects at least two accounts to keep the accounting equation (Assets = Liabilities + Equity) balanced. For instance, if a business purchases supplies with cash, the supplies account increases (debited) while the cash account decreases (credited).

Accounts help businesses track performance, manage budgets, and ensure transparency and compliance. Whether used by a small business or a large corporation, accurate and well-maintained accounts are essential for sound financial decision-making and reporting.