what does on account mean in accounting?

[alenaghose]

Hi all, I’ve seen the term "on account" used in some accounting entries and invoices. Can someone explain what it means and how it’s used in bookkeeping? Is it related to partial payments or something else? Appreciate any clarification!

 

[maria]

In accounting, "on account" means a transaction is made on credit rather than with immediate payment. It can apply to:

• Purchases on account – goods or services bought now, paid later (creates accounts payable).
• Sales on account – goods sold now, customer pays later (creates accounts receivable).

It reflects deferred payment.

 

[Mayank]

In accounting, "on account" refers to a transaction made without immediate cash payment. It typically indicates a sale or purchase made on credit, recorded as accounts receivable or accounts payable in the financial records.

 

[Shane Warne]

In accounting, "on account" means a partial payment or transaction made in advance or as credit, not settled in full at the time. It can refer to buying or paying on credit.

 

[ankita]

In accounting, "on account" refers to a transaction where payment is not made immediately but will be settled later. It typically means that goods or services were bought or sold on credit. For example, if a customer buys items on account, it increases accounts receivable. If a business purchases supplies on account, it increases accounts payable.

 

[nikhilrajoria]

On account On account is a transaction in credit - an amount of money owed by a customer (accounts receivable) or an amount of money owed by a supplier (accounts payable).

 

[Samuel]

In accounting, "on account" generally refers to conducting a transaction on credit, where a buyer receives goods or services from a vendor without immediate payment and will be invoiced later, or a buyer makes a partial payment without a specific invoice reference. Alternatively, it can describe a payment made to reduce an account balance without being tied to a specific invoice, like a partial payment from a customer that decreases the amount they owe.

 

[danisjohn]

In accounting, "on account" refers to a transaction made on credit, where payment is deferred to a later date. It can apply to both accounts receivable and accounts payable.

 

[brook]

In account On account is a concept used in accounting to describe a transaction in which no payment is made, but that it will be paid off at a later time. It generally implies that it was goods or services sold or purchased on credit. As an example, when a customer purchases goods using an account, it raises the accounts receivable. When a business acquires supplies on account, accounts payable are then increased.