DEFINITION of 'Absorbed Account'

An absorbed account is an account that has been combined with or that has been merged into another related account. Accounts are often absorbed into existing accounts as a way of simplifying the accounting process. Accounts for similar items under the same line of business can be easily combined. 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.

BREAKING DOWN 'Absorbed Account'

An absorbed account is an account that is merged with another account to simplify the accounting process. 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. Accounting

    Accounting is the systematic and comprehensive recording of financial ...
  2. Absorbed Cost

    Absorbed cost is a managerial accounting method that accounts ...
  3. Due From Account

    A due from account refers to an asset account in the general ...
  4. Closed Account

    A closed account is any account that has been closed out or otherwise ...
  5. Separate Account

    A separate account is a privately managed investment account ...
  6. Retirement Money Market Account

    A retirement money market account is a money market account that ...
Related Articles
  1. Trading

    Forex Basics: Setting Up An Account

    The line between profitable forex trading and ending up in the red may be as simple as choosing the right account.
  2. Trading

    Pick the Right Brokerage Account for Options

    Follow these steps to pick the right options brokerage account depending on your trading needs.
  3. Managing Wealth

    Accounting Research Manager: Career Path & Qualifications

    Discover the basic responsibilities of an accounting research manager, the path this career usually takes and the qualifications needed for this career.
  4. Personal Finance

    Career advice: financial analyst versus accountant

    Read an in-depth comparison between a career as a financial analyst and a career as an accountant, including how to determine which is best for you.
  5. Investing

    Understanding Capital And Financial Accounts In The Balance Of Payments

    The current, capital and financial accounts compose a nation's balance of payments, indicating the state of its economy and economic outlook.
  6. Personal Finance

    5 Mistakes You're Making With Money Market Accounts

    Money market accounts can be helpful "parking spots" for investors. Here are five key things to keep in mind when opening an account.
  7. IPF - Banking

    Foreign savings accounts: Should you open one?

    Find out whether opening a savings account in a foreign bank might make sense for your money. Learn the pros and cons – as well as how to establish one.
  8. Investing

    The Importance Of Analyzing Accounts Receivable

    While investors often focus on revenues, net income, and earnings per share, they should not overlook the importance of analyzing accounts receivable.
  9. Investing

    Financial History: The Rise of Modern Accounting

    How government regulation and the modern accounting profession grew hand-in-hand.
  10. Investing

    Money Market Accounts with the Highest Interest Rates

    Money market savings accounts can offer higher interest rates than regular or even high-yield bank savings accounts – and perks like these.
RELATED FAQS
  1. What's the difference between the current account and the capital account?

    Both accounts relate to the balance of payments of a nation. One considers goods and services currently produced, the other ... Read Answer >>
  2. Why would you keep funds in a money market account and not a savings account?

    Read about the differences between money market accounts and savings accounts, and see why a depositor would elect a money ... Read Answer >>
  3. Why is reconciliation important in accounting?

    Learn about accounting reconciliation and its importance for individuals and businesses to help prevent fraudulent activity ... Read Answer >>
  4. How much will it cost to hire an accountant to do my taxes?

    Find out how much it costs to hire an accountant and what benefits and services you can expect from your accountant. Read Answer >>
Trading Center