A contract account is an account that has a crypto balance and associated code.
When a contract is accepted by contractors, a separate account is then opened for each contract in order to bring together all of the costs that relate to a particular contract, and a serial number is given to the contract which is known and addressed to as a contract account.
All expenses that incur on an account of a contract, such as materials, wages, cost of sub-contracts and so on are debited to a contract account.
In the world of cryptocurrencies, a contract account is one that has an Ether (crypto) balance and has associated code, where code execution is triggered by transactions or messages which are received from other contracts. When executed, they can also perform operations of arbitrary complexity, and manipulate their own persistent storage, which can have its own permanent state and call other contracts.
This is due to the fact that all of the action on the Ethereum blockchain sets in motion through the transactions fired from externally owned accounts. As such, every time a contract account receives a transaction, the code it has is executed as instructed by the input parameters which were sent as part of the transaction itself. The contract code is then executed by the Ethereum Virtual Machine on each one of the nodes that participate in the network as part of their verification of new blocks.
This execution, however, needs to be deterministic, and its only context is the position of the block within the blockchain as well as all of the data which is available. The blocks on the blockchain then represent units of time, where the blockchain is a temporal dimension and represents the entire history of the states as well as the discrete-time point which were designed by the blocks within the chain itself.