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What's are difference between Capital Reserve & Reserve
Capital ?
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Answer Posted / y.neelam kumar
capital reserve is the profit which can be distributed as
dividend to the shareholders
reserve capital will have the amount which is transferred
from the capital reserve for some reason and the amount in
the reserve capital will never be used for the distribution
of dividend and the example for the reason is assume that
the company is redeeming debenture and the cash related to
debentures are invested in some projects and the company
redeem the debenture with the help of cash relating to the
capital reserve and now the company will take the amount
relating to the cash of the capital reserve which was used
in the redemption of the debentures and transfer to the
reserve capital because in future by mistake the company
should not declare dividend more then the cash available in
capital reserves
| Is This Answer Correct ? | 2 Yes | 3 No |
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