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Recording Reserves

Capital Reser...

Question

Capital Reserves are not freely distributed as profits.

A

True

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B

False

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Solution

The correct option is A True
Capital reserves are those reserves that are not created out of operating profits and which are not free for distribution by way of profit.

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Similar questions

Q. Capital reserves are normally created out of free of distributable profits.

Q. What are the Reserves created out of capital profits known as?

Q. State whether the following Statements are True or False

1. There is need to provide depreciation if it is maintained with care.
2. Depreciation cannot be provided in case of loss in a financial year.
3. A Specific reserve can be created for any purpose.
4. Capital Reserves are not freely distributed as profits.
5. Under the written down value method depreciation is calculated on the original cost of an asset.
6. Depreciation is the process of valuation of asset.
7. Depreciation is a non-cash expense.
8. Secret reserves are disclosed in Balance Sheet.
9. General reserves is created to meet contingency liability.
10. Depreciation is charged only on fixed asset.

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Q. _____are not available for distribution as profits while______can be utilized for creating reserve fund or for distribution as profits after deducting revenue exp.

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