Write the basis of differences b/w reserves and surplus .

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Solution

Dear Student,

Basis of Difference Reserves Surplus

a) Definition Amount of Profit specifically set aside for known/unknown contingencies Amount of profit left after setting aside for reserves & distributing off dividends & tax

b) Nature Planned: Reserve forms a planned amount Unplanned: As surplus is just left out it is an unplanned amount,

c) Types Reserves are of many types: Free/Committed Surplus is just the specific single type.

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Basis of Difference	Reserves	Surplus
a) Definition	Amount of Profit specifically set aside for known/unknown contingencies	Amount of profit left after setting aside for reserves & distributing off dividends & tax
b) Nature	Planned: Reserve forms a planned amount	Unplanned: As surplus is just left out it is an unplanned amount,
c) Types	Reserves are of many types: Free/Committed	Surplus is just the specific single type.