Distinguish between 'Revenue reserve' and 'Capital reserve'.

Open in App

Solution

Revenue Reserve Capital Reserve
It is formed out of revenue profit which is earned from normal activities of business operations. It is formed of capital profit which is a gain from other than normal activities of business operations, such as sale of fixed assets.
It can be used for distribution of dividend. It cannot be used for distribution of dividend.
It is created for increasing the financial position of the business. It is created for the purpose of the Companies Act.

Suggest Corrections

Similar questions

Distinguish between 'revenue reserve' and 'capital reserve'.

Distinguish between revenue reserve and capital reserve.

Give four examples each of 'revenue reserve' and 'capital reserve'.

Give four examples each of revenue reserve and capital reserves.

Join BYJU'S Learning Program

Revenue Reserve	Capital Reserve
It is formed out of revenue profit which is earned from normal activities of business operations.	It is formed of capital profit which is a gain from other than normal activities of business operations, such as sale of fixed assets.
It can be used for distribution of dividend.	It cannot be used for distribution of dividend.
It is created for increasing the financial position of the business.	It is created for the purpose of the Companies Act.