explain the meaning of reserves
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Reserves means a supply of a commodity not needed for immediate use but is available and reserved when needed.
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Here is your answer !
Reserves means a supply of a commodity not needed for immediate use but is available and reserved when needed.
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Reserve are the amount set aside out of profits.It is an appropriation of profit or accumulated profit to strengthen the financial position of the business. Reserve are not set aside to meet a liability or depreciation in the value of assets but is set aside to meet known or unknown contingency that may arise in future . Example of Reserve are reserve for equalization of dividend ,reason for increase cost of replacement .
Importance of Reserve :
1. Expansion of business .
2. Improvement in financial position .
3. Redemption of liabilities.
Reserve are the amount set aside out of profits.It is an appropriation of profit or accumulated profit to strengthen the financial position of the business. Reserve are not set aside to meet a liability or depreciation in the value of assets but is set aside to meet known or unknown contingency that may arise in future . Example of Reserve are reserve for equalization of dividend ,reason for increase cost of replacement .
Importance of Reserve :
1. Expansion of business .
2. Improvement in financial position .
3. Redemption of liabilities.
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