Definition of reserve account
1 : a valuation account that shows the estimated or actual decline in value of an asset and is always subtracted on a balance sheet from the related asset account to show net value a reserve account for depreciation reserve accounts for bad debts reserve account to reduce investments to market value
— called also allowance account, provision account, valuation account
2 : an account that shows an accrued usually estimated liability reserve account for income taxes
3 : an account that shows profits or surplus segregated or appropriated for a particular purpose reserve account for contingencies reserve account for replacement of fixed assets
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