Difference bitween capital account and reserve account assignment ignou
Answers
the balance of payment of a country contains two account
the capital account consists of capital transfers
Answer:
Capital and reserves both r considered to be the owner equity or shareholders fund.
But capital is the amount required to start a building or a company. If it is a sole trader or partnership then proprietor and the partners will bring in cash and in case of a public company the capital is raised by selling its share in the market.
Whereas reserve account is something which is created out of business profit, it is created in all business formats whether sole trader, partnership or company, it is also known as undistributed profits.
The reserve account is of two kind:
1. Free reserve that could be used for any purpose.
2.The committed reserve which is created for a specific purpose like Investment fluctuations reserve, workmen's compensation reserves.