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A cash trap account is a financial mechanism used to restrict access to funds in order to ensure that specific financial obligations, such as debt repayments or project funding, are met. Typically established as a separate bank account, it holds cash that can only be used for designated purposes, providing security for lenders or investors. This arrangement helps mitigate risk and ensures that necessary payments are prioritized, helping to maintain financial stability.

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2mo ago

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Related Questions

What is cash account?

what is a cash account


Is cash in transit account receivable or cash account?

why do you debit cash account and credit receivables for cash in transit


Is cash account temporary account?

No cash account is a permanent account. as u treated cash as a debit element in General journal against of Capital. Capital is a permanent account so cash too.


Know the journal entry for reimbursing the petty cash account?

[Debit] Petty Cash account [Credit] Cash account


Does a debit iincreasse a cash account?

Cash account has a debit as a normal balance so debit increases the cash account and credit reduces the cash account which is reverse of debit balance.


What are the examples of contra voucher?

# Cash account to Bank account # Bank account to Cash account # Bank account to Bank account


What is the normal balance for cash?

Cash is an asset account and like all assets accounts cash has a debit account as a normal account


Debiting the cash account will increase the account?

Yes, debiting a cash account means it increases.


How do you establish the journal entry for petty cash?

[Debit] Petty Cash account [Credit] Cash account


When is the petty cash account debited?

The petty cash account is debited when a company establishes or increases its petty cash fund. This entry reflects the outflow of cash from the main cash account to the petty cash account. Additionally, it may be debited when replenishing the petty cash fund, as it accounts for the expenses incurred that were paid from petty cash.


What is the normal balance of a cash account?

Cash account normally has debit balance.


What is the cash account in a company's ledger?

The cash account in the company's ledger is Bank.