Absorbed Account

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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.

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