.....reserve refers to the amount which are not free for distribution by way of dividend, whereas ..... reserve refers to the amount which are free for distribution by way of dividend.

ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

____reserve refers to the amount which are not free for distribution by way of dividend, whereas ____ reserve refers to the amount which are free for distribution by way of dividend.

A	Capital, Revenue
B	Revenue, Capital
C	Capital, Revaluation
D	Depreciation, Revaluation

Explanation:

Detailed explanation-1: -Revenue reserves are those reserves which are created out of profits available for distribution by way of dividend. Revenue reserve refers to the amount which are free for distribution by way of dividend.

Detailed explanation-2: -Dividend can be distributed from the profits earned by the business from its business operations. Securities premium, profit on forfeiture of shares and profit on sale of fixed assets are not the item of business operations, hence dividend can not be distributed from these.

Detailed explanation-3: -“Free Reserves” means such reserves which, as per the latest audited balance. sheet of a company, are available for distribution as Dividend.

Detailed explanation-4: -Revenue reserve is a portion of profit owned by the company and is kept aside for the use of other multiple purposes. This reserve is recorded in the profit and loss account and can be used the following way: Dividend to shareholder. Expand the business.

There is 1 question to complete.

GENERAL KNOWLEDGE

GK

ACCOUNTING