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Question

Dividend equalization reserve is an example of general reserve.

A
True
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B
False
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Solution

The correct option is B False
This statement is false. General Reserves are not kept aside for any particular purpose but for strengthening financial position of the company. Dividend Equalization reserve is a distributable reserve which is specifically set up to ensure that dividends remain stable for despite being changes in earnings. Dividend equalization reserve is a specific reserve.

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