Reserve Account (Noun)
Meaning
Funds taken out of earnings to provide for anticipated future payments.
Classification
Nouns denoting possession and transfer of possession.
Examples
- The company set aside a significant amount of money in the reserve account to cover potential warranty claims on its products.
- A portion of the profits were allocated to the reserve account to ensure sufficient funds for the annual dividend payout.
- To avoid unexpected financial burdens, the small business maintained a substantial reserve account to handle anticipated expenses such as taxes and insurance premiums.
- By consistently contributing to the reserve account, the firm was able to cover unforeseen expenditures and maintain its cash flow.
- As a precautionary measure, the board of directors voted to increase the reserve account by 20% to prepare for possible future downturns in the market.