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Simple English definitions for legal terms
running account
Read a random definition: affix
A quick definition of running account:
A running account is a type of record that shows the money that two people owe each other. It's like a list of all the things they've bought or sold to each other, and how much they still need to pay or be paid. It's important to keep track of a running account so that both people know how much they owe or are owed.A more thorough explanation:
A running account is an open and unsettled account that shows the reciprocal demands between parties. It is a type of account that exhibits ongoing debit and credit entries by two parties and has a fluctuating balance until either party finds it convenient to settle and close, at which time there is a single liability.
For example, if a customer buys goods on credit from a supplier, a running account is created. The supplier records the sale as a credit to the customer's account, and the customer records the purchase as a debit to their account. As the customer continues to buy goods on credit, the supplier adds more credits to the account, and the customer adds more debits. The balance of the account keeps changing until the customer pays off the debt, at which point the account is settled.
Another example of a running account is a bank account that has ongoing transactions, such as deposits and withdrawals, and a fluctuating balance until the account holder decides to close the account.