differentiate between general and specific reserve?
A reserve which is created out of the revenue profit is called revenue reserve. Revenue profit is earned in the normal course of the business. Revenue reserve refers to the undistributed revenue profit. It is created for strengthening the financial position, replacing deprecialble assets, redeeming liabilities, declaring uniform rate of dividend and conducting research and development functions. If the reserve is not needed in the future, it can be distributed as dividend to the shareholders.There are two types of revenue reserve:a) General ReserveA reserve which is created out of the profit not for a specific purpose is known as general reserve.General reserve is used for general purpose as per the discretion of the management. Usually, general reserve is used for strengthening the financial position and meeting future contingencies and losses.b) Specific ReserveA reserve which is created out of the profit for a particular purpose is known as specific reserve. Such reserve can not be utilized for any purpose other than specified. Specific reserve is created by debiting the profit and loss appropriation account. It can be invested in outside securities. It serves for a specific purpose as to equalize dividend or to redeem a fixed liability or to replace a fixed assets or to conduct a research and development work.The following are the important types of specific reserve:* Dividend equalization fund* Sinking fund* Research and development fund
capital reserve is not a free reserve
used to service loans use to pay corporate tax set aside as general reserve
Amalgamation reserve means the expenses bear by Transferee company for amalgamation with Transferor company is treated as reserve, this reserve is called as amalgamation reserve
how can we increase the general reserve
differentiate between general and specific reserve?
After redemption of debentures, debenture redemption reserve is to be transferred to general reserve.
State General Reserve Fund was created in 1980.
utilise
General reserve account cannot be used for purchases of building as general reserve accounts is fixed for some limited kind of transactions like
When debentures are redeemed payment is made from a reserve which is created at the time of purchase of such debentures,therefore at the time of payment first it is transferred to general reserve then as it is expenditure to company.
Revenue reserve is created out of revenue Profit . It is created out of Revenue Profit for exaple General Reserve, Dividend equalization reserve, Investment fluctuation reserve etc.
Boring in holidays how it can utilise usefully?
The past tense of "utilise" would be "utilised".
debit reserve accountcredit cash / bank
capital