Book Account Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Book Account, written in plain English, along with examples of how it is used.
What is Book Account?
(n) Book Account is the ledger account of a party maintained in the books of account containing all the financial transaction with that particular party during the period in a chronological order or in the order of occurrence of the transaction. It gives a clear and distinct picture of the amount due from or to such party at any time.
History and Meaning of Book Account
A book account is a legal term used in accounting to describe a ledger account maintained in the books of accounts of a party. This ledger account keeps a record of all financial transactions between two parties over a particular period, in chronological order or in the order of occurrence of the transaction. It provides a clear picture of the amount due from or to that party at any time.
Book accounts have been in use for centuries, dating back to the time when paper records began. They have enabled companies to track their financial transactions and to know the amount of money owed or due to them by their clients or suppliers. With technological advancements, paper records have been replaced by accounting software, which has made bookkeeping even more efficient.
Examples of Book Account
John and Mary have a clothing business. John maintains the book accounts of their suppliers, which includes the date of payment, quantity, and price of each transaction.
ABC LTD has a book account ledger for each of its customers, containing all financial transactions with that particular customer during the period in chronological order.
A law firm prepares book accounts for their clients to determine the amount of money owed by their clients and the fees charged for their services.
Legal Terms Similar to Book Account
Accounts receivable: These are debts owed to a firm or an individual arising from the sale of goods, services or loans. The records are usually maintained in book accounts.
General ledger: This is the primary book of account, which records all financial transactions of an organization.
Payable: This is the balance of money owed by a debtor or a buyer to a creditor or a seller, usually on a short-term basis. It is also maintained in book accounts.