Question

Name and explain different types of reserves in details.

Answer 1

Answer:

There are different types of reserves used in financial accounting like capital reserves, revenue reserves, statutory reserves, realized reserves, unrealized reserves.

Answer 2

Different types of reserves in Accountancy

Explanation:

There are two main types of reserves: revenue reserves and capital reserves.

• Revenue reserves are portions of profits gained from normal operations of a company that are then set aside. Revenue reserves are divided into two types:

1. General reserves are not set aside for any specific purpose, but for the overall financial strengthening of the organization.
2. Specific reserves are set aside for a unique purpose and cannot be used for any other occasion.

• A capital reserve is derived from the capital gain and is not paid to the shareholder as a dividend. This reserve can not be created out of the profit that the core operation earns. In general, capital reserves are set aside for capital losses.