What is Capital reserve and Revenue reserve...?
Any example would be highly appreciated.
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Answer Posted / ruben
Capital reserve denotes funds set aside out of profits
generated from exceptional transactions not occuring in
ordinary courseof business.e.g sale of Assets (being a
going concern), Profits arising in Forfeiture of Shares due
to non payment of calls in arrear etc.They are not
available for distribution to share holders in normal
circumstances.
Revenue reserve denotes profits set aside from transactions
involving ordinary & usual business activities.e.g sale of
goods & services, investment profits if it is in ordinary
course of business etc.They are available for distribution
to share holders in normal circumstances.
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