Posted in Finance, Accounting and Economics Terms, Total Reads: 411
General definition of deposit is that it is a kind of transaction in which a portion of funds is transferred to other party for purpose of safekeeping or as collateral for delivery of any good. It is similar to the amount of money an investor transfers to the bank’s checking account or savings to increase the credit of the account.
In some contracts deposit is an act of good faith where a percentage of goods are transferred before delivery in a sense of trust. It is kind of a down payment required before a commercial transaction as a support of intention to complete it.
It is said to be an act of placing property or money with another who has fiduciary duty regard to it or will hold it in trust; sometimes it is hold for the benefit of the owner.
For Example Before entering into new future project an initial margin deposit is necessary.
A security deposit is given by tenant to landlord as a promise of obeying rules and caution money to cover any damages caused.
Purpose of deposit can be just for safekeeping, payment or providing it as a sense of trust.