In accounting, what is an account?

An account is best defined as an individual record of increases and decreases in specific items. In accounting, each account is used to track the financial activity related to a particular asset, liability, equity, revenue, or expense. This means that any transactions affecting these items are accurately recorded in their respective accounts, allowing for a clear view of changes over time.

For example, a cash account would show all cash inflows (such as sales) and outflows (like expenses or purchases), providing a detailed insight into the cash position of the business. This specificity is crucial for the overall accounting process, as it facilitates the preparation of financial statements and provides the necessary data for financial analysis.

While other options may contain elements related to accounting, they do not accurately capture the essence of what constitutes an account. Legal documents, summary reports, and financial statements represent broader concepts or collections of accounts rather than the individual record-keeping function that is fundamental to accounting.