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.