A specific reserve can be created for specific purpose.

True

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False

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Solution

The correct option is A True
Specific reserve is that reserve which is created for a specific purpose and can be utilized only for that purpose. For example, Dividend Equalization Reserve is a specific reserve, because it is created to maintain a steady rate of dividend flow. Debenture redemption reserve, Capital redemption reserve, Investment fluctuation reserve etc. are the example of specific reserve.

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Similar questions

If there is a reserve for any specific purpose, it will be shared only to the extent of that part for which there is _________ liability.

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