A memorandum account (memo account) is 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 accounts are are not part of the normal accounts of an entity.

Examples of a memorandum account are such accounts that are used by an entity to record the number of shares outstanding and any changes thereto, as such changes do not impact its total equity.

Another example is an accounted created to track costs arising from events that were not reasonably foreseen in an entity’s last reporting period or periods. By tracking these costs in a memorandum account, an entity can plan and attempt to recover these costs at a later date.