Question

Write the word/term/pharse which can substitute each of the following statement :

The Reserves created out of capital profits.

Answer 1

The Reserves created out of capital profits- Capital Reserve

Explanation:
Capital reserves are the reserves that are created out of the capital profits of a business. Capital profits are those profits that are not earned in the normal business activities. These reserves are created out of the transactions that are capital in nature. These reserves can be used to write-off the capital losses and to issue fully-paid bonus shares.