Absorbed Account

AAA

DEFINITION of 'Absorbed Account'

An account that has been combined or that has merged with another related account. Accounts are often absorbed into existing accounts as a way of simplifying the accounting process. Once an account has been absorbed the original account will cease to exist, although a paper trail will remain to show how funds have been moved.

INVESTOPEDIA EXPLAINS 'Absorbed Account'

Accounts are simply a way for a company or individual to separate finances into manageable categories, so it is not surprising that a separation or category that made sense at one time can become obsolete. When this happens, the obsolete account is absorbed into an area where it fits better. Rather than being a unique account, the absorbed account is combined with another existing account. When this is done at a business, the accountant or bookkeeper records and reconciles the changes.

RELATED TERMS
  1. Chartered Accountant - CA

    An accounting designation given to accounting professionals in ...
  2. Accountant

    A professional person who performs accounting functions such ...
  3. Accounting

    The systematic and comprehensive recording of financial transactions ...
  4. Certified Public Accountant - CPA

    A designation given by the American Institute of Certified Public ...
  5. General Ledger

    A company's main accounting records. A general ledger is a complete ...
  6. Expanded Accounting Equation

    The expanded accounting equation is derived from the accounting ...
Related Articles
  1. Depreciation: Straight-Line Vs. Double-Declining ...
    Forex Education

    Depreciation: Straight-Line Vs. Double-Declining ...

  2. A Look At Accounting Careers
    Personal Finance

    A Look At Accounting Careers

  3. Common Clues Of Financial Statement ...
    Retirement

    Common Clues Of Financial Statement ...

  4. Financial History: The Evolution Of ...
    Professionals

    Financial History: The Evolution Of ...

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center