Capital Reserve

This term most typically applies within the context of accounting for government, espcially for municipalities. It is a “piggy bank” for the government. The government has a lot of “piggy banks,” as these funds must be used for a specified purpose.

The government taxes our hard-earned income. It then socks the money away with plans to spend it on something that we supposedly need in the future.

On something we need? Yeah, something important...like a new government building, or a parking garage. Governments utilize a different type of accounting referred to as “fund accounting." Governmental accounting is used by the government because, like the government, it sometimes...makes no sense. It's kind of like your mother telling you she can’t pay you your allowance this week because the cash in her wallet is being “reserved." Mommy needs a new pair of shoes.