A contract account refers to the account that keeps track of the crypto balance and the associated code. Generally, when someone accepts any contract, a separate account is opened to keep track of all the costs that come with the given contract. A serial number is also assigned, that is addressed as the contract account.
In the case of cryptocurrencies, contract accounts are made using Ether balance along with the associated code. Any transaction made regarding the contract executes the code. This, in turn, allows the contract account to keep a steady balance sheet of all the transactions.