Definition
Accounting, in legal usage, refers to the making up and rendition of an account — a formal statement of receipts, disbursements, and transactions — submitted either voluntarily or pursuant to court order. The term carries two related but distinct meanings depending on context:
1. Fiduciary accounting. The formal process by which a person in a position of trust — an executor, administrator, trustee, guardian, or other fiduciary — renders a detailed account of all property received, managed, and disbursed on behalf of beneficiaries or the estate. This accounting may be filed periodically, upon termination of the fiduciary relationship, or when ordered by a court of equity or probate jurisdiction. The account must be confirmed or approved by the court before the fiduciary is discharged from liability for the period covered.
2. Action of account (accounting at law or in equity). A cause of action, historically available both at law and in equity, compelling a defendant who stands in a fiduciary or quasi-fiduciary relationship to the plaintiff to render a reckoning of funds received or managed. In equity, the action for an accounting is a remedy that can compel disclosure and restitution when the amounts owed cannot be determined without examination of the defendant's books and records. The remedy is distinct from an action simply to recover a stated sum — it presupposes that the full extent of the obligation is unknown or contested, and that the defendant holds money that in equity and good conscience belongs to the plaintiff.
Common Language
Modern common usage (Wiktionary): Present participle and gerund of "account" — no independent substantive definition offered; in general usage, "accounting" means the practice or profession of recording, classifying, and summarizing financial transactions.
Historical common usage (Webster's 1913): The act of reckoning or adjusting accounts; a system of recording and summarizing business and financial transactions.
The ordinary meaning of accounting refers broadly to financial recordkeeping as a profession or practice. The legal meaning is narrower and more specific: a formal legal proceeding or compelled act by which a person holding another's money or property must render a detailed reckoning and submit it to judicial scrutiny. The professional and the procedural are related but should not be conflated in legal research.
Common Confusion
ACCOUNTING VS. ACCOUNT STATED VS. ACTION ON THE CASE
An accounting (the proceeding) is not the same as an account stated, which is an agreement between parties that a particular balance is owed and which can be sued upon as a liquidated claim. An accounting is sought precisely when the balance is not yet determined. Researchers should also distinguish an accounting in equity — a broad remedial proceeding — from the narrower common-law action of account, which was a distinct writ with formal pleading requirements that largely fell into disuse as equity absorbed the remedy.
Core Elements
For an equitable action for accounting, courts have generally required:
1. The existence of a fiduciary, quasi-fiduciary, or confidential relationship between the parties, or a relationship giving rise to a duty to account (such as partnership, agency, or trusteeship);
2. A complex of transactions or accounts that cannot be resolved by ordinary legal action for a sum certain;
3. The inadequacy of a legal remedy — equity jurisdiction over accounting was founded on the complexity or confidentiality of the records involved.
For a fiduciary accounting in probate or trust administration:
1. Identification of all assets received and their valuation;
2. A statement of all income, gains, disbursements, losses, and distributions during the accounting period;
3. A statement of assets on hand at the close of the period;
4. Disclosure of fiduciary compensation claimed.
Why It Matters in Research
The term "accounting" appears across multiple procedural and substantive contexts in the Law Mind corpus, and careful researchers must track which meaning is operative. In probate and trust materials, accounting refers to a formal court filing and approval process; in equity jurisprudence, it refers to a cause of action or remedy. Confusion between the two produces misreadings of historical decisions.
Historical sources frequently discuss accounting as a remedy appended to other equitable relief — fraud, breach of fiduciary duty, partnership dissolution — rather than as a standalone proceeding. When reading older cases and treatises, note that "account" and "accounting" are sometimes used interchangeably with the writ of account, a common-law form that had distinct procedural requirements. By the late nineteenth century, most American jurisdictions had merged the common-law and equitable forms, but the historical distinction will appear in materials predating merger.
The Rapalje & Lawrence entry draws an important practical distinction: the action for not rendering an account and the action for not paying over sums found due are separate causes. A plaintiff who has obtained an accounting and established a balance must bring a further action (or proceed further in the same suit) to enforce payment. This distinction is relevant to understanding the multi-stage structure of equity proceedings in the corpus.
The fiduciary accounting in trusts and estates has been substantially standardized in modern practice by the Uniform Fiduciary Accounting Principles, but historical accountings in the corpus will follow older local forms that vary considerably by jurisdiction. Researchers using probate records and trust litigation materials should consult the companion encyclopedia entries for the governing standards applicable to the period and jurisdiction in question.
Accounting malpractice — the professional liability of a certified public accountant or auditor — is a related but distinct body of law addressed in the torts materials. That body of doctrine concerns negligence and breach of professional duty, not the equitable remedy or fiduciary duty to account discussed here.
Historical Dictionary Support
All three dictionary sources agree on the core definition: accounting is the making up and rendition of an account, either voluntarily or by court order. The formulation is consistent across Black's First and Second Editions and Rapalje & Lawrence, suggesting this was a settled, uncontroversial definition by the late nineteenth century.
Rapalje & Lawrence adds the most practical detail, noting that accounting "before the ordinary" (the ecclesiastical or probate authority) was a distinct proceeding, and flagging the doctrinal distinction between an action for failing to render an account and an action for failing to pay over funds after accounting. These distinctions, though not elaborated in the dictionary entries themselves, point to the layered procedural history of the remedy.
The passages appearing in the Black's entries referencing parliamentary acts and the Bank of England concern the Accountant-General of the Court of Chancery — a now-abolished English office that received funds lodged in court and deposited them with the Bank of England. That office is not directly relevant to the definition of accounting as a legal term, but its presence in the same dictionary entries reflects the historical proximity of the word to Chancery practice, where the accounting remedy was most fully developed.
No major disagreements appear among the historical sources on the substantive definition. The historical dictionaries do not address modern trust accounting standards, unified probate codes, or professional accounting liability — all of which are products of twentieth-century development and must be found in the encyclopedia and treatise materials.
Jurisdictional Note
The formal requirements for fiduciary accountings vary significantly across American jurisdictions in format, timing, and court approval procedures. Federal courts exercising equity jurisdiction recognize the accounting remedy but apply their own procedural rules. Researchers should not assume uniformity across state probate systems, particularly for materials predating the Uniform Probate Code or a state's adoption of the Uniform Trust Code.
Encyclopedia Cross-Reference
Fiduciary Accounting — Principles, Standards, and the Uniform Fiduciary Accounting Principles (The Law Mind Trusts, Estates & Probate Encyclopedia)
Contested Accountings and Objections to Fiduciary Conduct (The Law Mind Trusts, Estates & Probate Encyclopedia)
Professional Malpractice — Accounting Malpractice (The Law Mind Torts & Personal Injury Encyclopedia)