Question

Where do reserves appear in a balance sheet? Give a few examples of reserves.

Answer 1

When a company earns a given amount of profit at the end of a financial year, a certain portion of it is usually retained in the business to meet future contingencies, growth prospects and more. This amount of money which is kept aside is termed as Reserves.
Reserves are shown under the head Reserves and Surpluses on the liabilities side of the balance sheet after capital.
For example, General Reserves, Capital Reserve, Workmen compensation fund, Reserve for redemption of debentures.