Question

28. Any reduction to market value of current investment from cost, on valuation date is debited to
(a) Revaluation reserve
(b) Profit and loss account
(c) Capital reserve
(d) General reserve

Answer 1

Answer:

Profit and loss account

Answer 2

Option “C” is the correct answer i.e. capital reserve.

• Any reduction to market value of current investment from cost on valuation date is debited to capital reserve.

• A capital reserve is an account in the impartiality section of the balance sheet that can be used for eventualities or to offset capital losses.  

• It is resulting from the accrued capital surplus of a company, created out of capital profit.

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