An account that has no accounting function, but rather is an information account that is used for clarification and explanation purposes, conveying memorandum information, particularly for transactions or events or conditions that arise unexpectedly or defy normal business state of affairs.

Such information is provided alongside an entity’s financial statements or general ledger entries as a certain explanation or clarification for specific transactions, particularly those that require specific adjustment to account for unforeseen or unexpected activities or occurrences over the course of a reporting period. Memorandum information help present all relevant disclosures, including those relating to necessary amendments reflecting such activities and occurrences. These amendments are usually made to an entity’s books and financials, so that its financial reporting meets the accounting requirements for full disclosure.

Memorandum accounts are are not part of the normal accounts of an entity. For example, a memorandum account might be used to record an entity’s number of shares outstanding.