what is capital reserve with example?
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A capital reserve is an account in the equity section of the balance sheet that can be used for contingencies or to offset capital losses. It is derived from the accumulated capital surplus of a company, created out of capital profit.
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A capital reserve is an account on the balance sheet to prepare the company for any unforeseen events like inflation, instability, need to expand the business, or to get into a new and urgent project. As an example, we can talk about profit on the sale of fixed assets, profit on a sale of shares, etc.
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