diff --git a/erpnext/accounts/doctype/account/account.js b/erpnext/accounts/doctype/account/account.js
index 79e11e3..079454e 100644
--- a/erpnext/accounts/doctype/account/account.js
+++ b/erpnext/accounts/doctype/account/account.js
@@ -53,6 +53,12 @@
 				frm.trigger("update_account_number");
 			});
 		}
+
+		if(!frm.doc.__islocal) {
+			frm.add_custom_button(__('Merge Account'), function () {
+				frm.trigger("merge_account");
+			});
+		}
 	},
 	account_type: function (frm) {
 		if (frm.doc.is_group == 0) {
@@ -98,6 +104,44 @@
 		}
 	},
 
+	merge_account: function(frm) {
+		var d = new frappe.ui.Dialog({
+			title: __('Merge with Existing Account'),
+			fields: [
+				{
+					"label" : "Name",
+					"fieldname": "name",
+					"fieldtype": "Data",
+					"reqd": 1,
+					"default": frm.doc.name
+				}
+			],
+			primary_action: function() {
+				var data = d.get_values();
+				frappe.call({
+					method: "erpnext.accounts.doctype.account.account.merge_account",
+					args: {
+						old: frm.doc.name,
+						new: data.name,
+						is_group: frm.doc.is_group,
+						root_type: frm.doc.root_type,
+						company: frm.doc.company
+					},
+					callback: function(r) {
+						if(!r.exc) {
+							if(r.message) {
+								frappe.set_route("Form", "Account", r.message);
+							}
+							d.hide();
+						}
+					}
+				});
+			},
+			primary_action_label: __('Merge')
+		});
+		d.show();
+	},
+
 	update_account_number: function(frm) {
 		var d = new frappe.ui.Dialog({
 			title: __('Update Account Number / Name'),
diff --git a/erpnext/accounts/doctype/account/account.py b/erpnext/accounts/doctype/account/account.py
index 35974e5..cc33c54 100644
--- a/erpnext/accounts/doctype/account/account.py
+++ b/erpnext/accounts/doctype/account/account.py
@@ -217,3 +217,23 @@
 	if name != new_name:
 		frappe.rename_doc("Account", name, new_name, ignore_permissions=1)
 		return new_name
+
+@frappe.whitelist()
+def merge_account(old, new, is_group, root_type, company):
+	# Validate properties before merging
+	if not frappe.db.exists("Account", new):
+		throw(_("Account {0} does not exist").format(new))
+
+	val = list(frappe.db.get_value("Account", new,
+		["is_group", "root_type", "company"]))
+
+	if val != [cint(is_group), root_type, company]:
+		throw(_("""Merging is only possible if following properties are same in both records. Is Group, Root Type, Company"""))
+
+	if is_group and frappe.db.get_value("Account", new, "parent_account") == old:
+		frappe.db.set_value("Account", new, "parent_account",
+			frappe.db.get_value("Account", old, "parent_account"))
+
+	frappe.rename_doc("Account", old, new, merge=1, ignore_permissions=1)
+
+	return new
diff --git a/erpnext/accounts/doctype/account/test_account.py b/erpnext/accounts/doctype/account/test_account.py
index 2d9931b..9bf29c1 100644
--- a/erpnext/accounts/doctype/account/test_account.py
+++ b/erpnext/accounts/doctype/account/test_account.py
@@ -6,6 +6,7 @@
 import frappe
 from erpnext.stock import get_warehouse_account, get_company_default_inventory_account
 from erpnext.accounts.doctype.account.account import update_account_number
+from erpnext.accounts.doctype.account.account import merge_account
 
 class TestAccount(unittest.TestCase):
 	def test_rename_account(self):
@@ -25,7 +26,7 @@
 		new_account_number = "1211-11-4 - 6 - "
 		new_account_name = "Debtors 1 - Test - "
 
-		update_account_number("1210 - Debtors - _TC", new_account_number, new_account_name)
+		update_account_number("1210 - Debtors - _TC", new_account_name, new_account_number)
 
 		new_acc = frappe.db.get_value("Account", "1211-11-4 - 6 - - Debtors 1 - Test - - _TC",
 			["account_name", "account_number"], as_dict=1)
@@ -35,6 +36,67 @@
 
 		frappe.delete_doc("Account", "1211-11-4 - 6 - Debtors 1 - Test - - _TC")
 
+	def test_merge_account(self):
+		if not frappe.db.exists("Account", "Current Assets - _TC"):
+			acc = frappe.new_doc("Account")
+			acc.account_name = "Current Assets"
+			acc.is_group = 1
+			acc.parent_account = "Application of Funds (Assets) - _TC"
+			acc.company = "_Test Company"
+			acc.insert()
+		if not frappe.db.exists("Account", "Securities and Deposits - _TC"):
+			acc = frappe.new_doc("Account")
+			acc.account_name = "Securities and Deposits"
+			acc.parent_account = "Current Assets - _TC"
+			acc.is_group = 1
+			acc.company = "_Test Company"
+			acc.insert()
+		if not frappe.db.exists("Account", "Earnest Money - _TC"):
+			acc = frappe.new_doc("Account")
+			acc.account_name = "Earnest Money"
+			acc.parent_account = "Securities and Deposits - _TC"
+			acc.company = "_Test Company"
+			acc.insert()
+		if not frappe.db.exists("Account", "Cash In Hand - _TC"):
+			acc = frappe.new_doc("Account")
+			acc.account_name = "Cash In Hand"
+			acc.is_group = 1
+			acc.parent_account = "Current Assets - _TC"
+			acc.company = "_Test Company"
+			acc.insert()
+		if not frappe.db.exists("Account", "Accumulated Depreciation - _TC"):
+			acc = frappe.new_doc("Account")
+			acc.account_name = "Accumulated Depreciation"
+			acc.parent_account = "Fixed Assets - _TC"
+			acc.company = "_Test Company"
+			acc.insert()
+
+		doc = frappe.get_doc("Account", "Securities and Deposits - _TC")
+		parent = frappe.db.get_value("Account", "Earnest Money - _TC", "parent_account")
+
+		self.assertEqual(parent, "Securities and Deposits - _TC")
+
+		merge_account("Securities and Deposits - _TC", "Cash In Hand - _TC", doc.is_group, doc.root_type, doc.company)
+		parent = frappe.db.get_value("Account", "Earnest Money - _TC", "parent_account")
+
+		# Parent account of the child account changes after merging
+		self.assertEqual(parent, "Cash In Hand - _TC")
+
+		# Old account doesn't exist after merging
+		self.assertFalse(frappe.db.exists("Account", "Securities and Deposits - _TC"))
+
+		doc = frappe.get_doc("Account", "Current Assets - _TC")
+
+		# Raise error as is_group property doesn't match
+		self.assertRaises(frappe.ValidationError, merge_account, "Current Assets - _TC",\
+			"Accumulated Depreciation - _TC", doc.is_group, doc.root_type, doc.company)
+
+		doc = frappe.get_doc("Account", "Capital Stock - _TC")
+
+		# Raise error as root_type property doesn't match
+		self.assertRaises(frappe.ValidationError, merge_account, "Capital Stock - _TC",\
+			"Softwares - _TC", doc.is_group, doc.root_type, doc.company)
+
 def _make_test_records(verbose):
 	from frappe.test_runner import make_test_objects