What is a Holding Account?

A holding account is one in which you don’t want to allocate it to something definite but want to hold funds to track something.

For example, if I wanted to track how much I’d been paying on odesk for contractors for a feature build of software, I’d create a holding account. I’d call it ‘Holding A/C - Feature ABC’ and each time I had a bill, I’ll allocate it to that account. I’d track how much money is going into that account.

Once that feature has been built, I’d take away everything from that holding account, so it’s now zero and put that as a fixed asset.

Next: What is Depreciation and Why Depreciate? An Easy to Understand Illustration - Straight Line and Diminishing Value


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