Deposit, in the context of banking, refers to the funds transferred to a financial institution, such as a bank. This is commonly done in order to keep funds safe. Depending on the kind of account and interest rates offered, this may also be done to generate profit from the account holder’s funds. By making a deposit, an account holder adds to his account balance.
There are different types of deposit accounts. Current accounts and savings accounts are examples of these. Every time a deposit is made, the transaction is recorded by the bank. In a bank’s records, a deposit is noted under liabilities, since this is an amount which the bank owes to the client.
Usually, before making a deposit, the depositor must first fill out a deposit slip. This is done to specify the type of account and funds involved in the transaction, as well as the amount to be deposited. Such slips are kept by the bank for tracking purposes, to help them determine how much has been deposited in one day. The depositor also has a copy of this slip, which serves as the receipt. If a mistake is committed on the bank’s end, the depositor can present his deposit slip copy in order for the records to be corrected.
Deposit, in the context of commerce, may also refer to an amount of money paid which serves as a security for the delivery of a product to be purchased. For instance, a seller may require a certain percentage as deposit from the buyer before he orders the product from the manufacturer. In real estate, a deposit may also be required before a piece of property is reserved for an interested party. In this context, such a deposit may also be referred to as a contract deposit.
