Question

security premium reserve in an example of.....................?
1. revenue reserve
2. Capital reserve
3. reserve capital
4. Revaluation reserve

Answer 1

The correct answer is option 2.

Securities premium reserve is a type of capital reserve.

This reserve is used to issue fresh shares or debentures at a premium amount.
It is a part of accumulated profits.

Capital reserve is created out of undistributed profits to make the company financially stronger and prepared for future emergencies.