Question

Why profit out of general reserve cannot be used by the partners?

Answer 1

Explanation:

· If it retains some of the profits, it lists them on the balance sheet as retained earnings. A general reserve fund is one way to set aside retained earnings for future spending. ... A company's balance sheet is an equation: Assets = Liabilities + Shareholder's Equity.

Answer 2

Answer:

A general reserve is a capital or a equity account. It is reported on the balance sheet under the liabilities in the right sided section of the balance sheet.

Look at a sample balance sheet.

The assets are on the left side and liabilities and capital are on the right side. Everything on the right side is not called a liabilty but its nature regards how you debit or credit it will be like a liability.