Question

Divisible profits do not include

a. reserve fund

b. profit and loss a/c balace

c. revaluation reserve

d. insurance fund

Answer 1

hi friends


ans is (b)


holp it help you

Answer 2

Solution :-

The correct answer of this question is Option (c), Revaluation Reserve.

Revaluation Reserve -

Revaluation reserve is the reserve which is created when any Fixed Asset/Non Current Asset is revalued upwards. In that case instead of transferring the value with which the respective asset has been increased to Income Statement, it is transferred to a separate account, so that the profits are not overstated. This account is known as Revaluation Reserve Account. 

Following entry is passed when revaluation reserve account is to be created.

Fixed Asset Account               Dr.

         To Revaluation Reserve Account


This is shown under Reserves on the liabilities side of the Balance Sheet.
Revaluation reserve is a non-cash reserve. So, there is no inflow of funds in this case to the company. That is why revaluation reserve is included in divisible profits. All the other are included in divisible profits.

So, Option (c) is correct.