An account-based ledger maintains state associated with addresses instead of representing every spend solely as consumption of previous unspent outputs. Ethereum accounts include a balance and nonce, while contract accounts also connect to code and storage. A transaction changes the global state according to execution rules. Token balances may live inside a token contract's storage rather than in the native-currency balance field, so an address's ETH balance does not describe every asset associated with it.

Suppose an account has ten units of native currency and sends two units to another account. A simplified ledger view decreases one balance and increases the other, with additional fee accounting and transaction sequencing applied by the protocol. An ERC-20 transfer follows a different contract-level path: the token's contract updates its own balance records after checking the caller's authority. Both actions can appear in the same wallet interface while changing different parts of the chain's state.

Ethereum transaction nonces order an account's outgoing transactions and help prevent replay within the relevant rules. Shared contract storage also means one user's action can affect what the next user's action observes. A swap price, allowance, or auction state may change before a pending transaction executes. The account model therefore does not make a signed operation independent of ordering.

When comparing it with a UTXO system, examine the actual state-transition rules, concurrency model, and signing requirements instead of assuming one design automatically provides better privacy or throughput.