Question

Reserve Capital short note​

Answer 1

Answer:

Capital Reserve is a type of profit that is earned on capital transactions - an example would be the profit arising from the forfeiture of shares, share premium, Capital Redemption Reserve or Debenture Redemption Reserve.

Profits put into capital reserve are not available to share holders for distribution and can be used for specified purposes only - such as writing off Goodwill, issue of bonus shares, and writing off any loss on issue or redemption of shares or debentures.