What is an Account?
The account is a record that covers the increase and decrease of any specific asset, liability, equity, revenue, or expense. Accounts are broadly known as book-keeping or ledger. There is a different meaning of accounts in banking, here accounts are the agreement performing which a bank or financial institution takes the control of its customer’s asset.
Understanding an Account (Banking)
Once accounts were created to keep money in a safe place when a person travels far places. Now there are different types of accounts present in the banking system and are created all over the world to get different benefits. A bank account is now considered a liquid asset.
Accounts can be defined as records of business transactions. A business may have thousands of accounts the list of these accounts is called a chart of accounts. Every transaction affects two accounts, the balance of every account is either debit or credit.
An account can be created against a customer’s name. A business might have lots of customers, and suppliers and all of them should be identical by their account name. The account can be increased or decreased by the transactions with that specific customer.
Sale on Account
Unlike the bank account, the sale on the account is selling goods on credit. The seller transfers the good before the customer makes any payments. Sometimes buyer gets a tread discount if he/she pay the money within 10 days.