Question

in what way should the term reserve be used, if it all, in financial accounting?

in what way should the term reserve be used, if it all, in financial accounting?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Reserve is also called Retained Earnings. Profit which is earned during the year and not used for distribution as dividend but amount retained in the business for future use are called reserve.

There are two types of main reserves:

1) Revenue Reserve

2) Capital Reserve.

Revenue Reserve is kept from the Company’s regular earnings or day to day operations.

Revenue Reserve is of types:

  1. General Reserve
  2. Specific Reserve.

General Reserve is not kept for any specific purpose but Specific reserve is kept for a particular purpose.

Capital reserve is created from capital profit. It is generated from the sale of assets of the company.

Uses of Reserves:

  1. Dividend Payment
  2. Bonus Issue
  3. Purchase of Fixed Assets
  4. Repayment of Liabilities
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
All the following are ways in which accounting information is used by financial accounting users except...
All the following are ways in which accounting information is used by financial accounting users except to a.   buy, sell, hold equity and debt instruments. b.   decide whether to invest in the company. c.   evaluate borrowing capacity to determine the extent of a loan to grant. d.   plan and control company's operations.
Discuss the differences between financial and managerial accounting. What types of financial statements are used by...
Discuss the differences between financial and managerial accounting. What types of financial statements are used by business organizations?
Students should define the areas of financial and managerial accounting as well as identify the differences...
Students should define the areas of financial and managerial accounting as well as identify the differences between the two areas of accounting. The paper should address the following differences between the two areas of accounting: Who are the users in each area of accounting? What accounting guidelines are used? Describe relevance and precision for the areas. What is the emphasis of each accounting area and why (i.e. historical data, future)? Papers should be well written, clear, concise, and include at...
QUESTION Define the meaning of the term “materiality” as it is used in accounting and auditing....
QUESTION Define the meaning of the term “materiality” as it is used in accounting and auditing. What is the relationship between materiality and the phrase “reasonable assurance” used in the auditor’s report?
In the accounting world, financial statements must be prepared a certain way. Many people rely on...
In the accounting world, financial statements must be prepared a certain way. Many people rely on the accuracy of these statements, both internally to the company and externally. Why do you think its so important for financial statements to be prepared a certain way?
Introduction to Accounting and BusinessThe financial statements are all interrelated. What operating or financial data appears...
Introduction to Accounting and BusinessThe financial statements are all interrelated. What operating or financial data appears on more then one statement? Is there a specific preparation order for the financial statements? Why is that important?
Which of the following is not true regarding accounting income? (1) the term is one used...
Which of the following is not true regarding accounting income? (1) the term is one used on Form 1041 to refer to income as computed under the applicable principal and income act as modified by the trust document (2) This represents the amount that must bee mandatorily distributed by terms of any trust that qualifies as a simple trust (3) The standards for computing accounting income are issued by the Financial Accounting Standards Bpard (4) The number must often differs...
What are some of the challenges inherent to accounting for long-term assets and the accuracy of...
What are some of the challenges inherent to accounting for long-term assets and the accuracy of the financial statements?
Governmental Accounting Funds used in state and local government accounting and financial reporting are classified into...
Governmental Accounting Funds used in state and local government accounting and financial reporting are classified into three categories: (1) governmental funds, (2) proprietary funds, and (3) fiduciary funds. 1.What measurement focus is used for each of these three categories 2.what types of assets and liabili- ties are reported for each measurement focus?
5)  What accounting term is used to describe stock temporarily repurchased by a corporation?  Under the stimulus act...
5)  What accounting term is used to describe stock temporarily repurchased by a corporation?  Under the stimulus act why do you think corporations are not allowed to use recovery money to repurchase their own stock?  Do you agree with this restriction?  Why or why not?  If corporations repurchase their own stock, which of the 3 categories of financial ratios (liquidity, solvency, profitability),would be affected?  Indicate whether the category or categories would improve or deteriorate identifying which ratios within each of the categories identified would be most...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT