Question

Dividend equalization reserve is an example of general reserve.

• A. True
• B. False

Answer 1

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.