Download App

P2 C3 Provisions and Reserves — Account STD 11 Commerce — Question

Gujarat BoardEnglish MediumSTD 11 CommerceAccountP2 C3 Provisions and Reserves3 Marks
Question
Distinguish between : $(1)$ General Reserve and Capital Reserve :
✓

Answer

Difference between General Reserve and Capital Reserve:
Points General Reserve Capital Reserve
$1.$ Meaning If certain amount is kept aside from the profit of the unit for strengthening the economic position of the unit, such amount is called the General Reserve. The reserve which cannot be utilised for distribution of dividend is called Capital Reserve.
$2.$ Profit Generally, general reserve is the revenue profit of the business, because it is created from the revenue profit. Capital reserve is the capital profit of the business, because the amount of capital profit is taken to Capital Reserve.
$3.$ Uses General reserve can be used for any purpose like for the growth of the business or for distribution of dividend or to meet with contigent requirements Capital reserve can be used to write off loss on sale or revaluation of fixed assets or to write off intangible and fictitious assets like goodwill, preliminary expenses, discount on issue of shares or debentures
$4.$ Dividend General reserve can be used for distribution of dividend. Generally, capital reserve cannot be used for distribution of dividend. Divided can be paid out of capital reserve only under specific circumstances subject to certain conditions.
$5.$ The effect in Balance Sheet General reserve is shown in balance sheet on liabilities side under the heading of Reserve and Surplus. Capital reserve is shown in the Balance sheet on liabilities side under the heading of 'Reserve and Surplus' separate to general reserve.

 

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "Give Answer As Asked . (3 Marks)" from P2 C3 Provisions and Reserves→P2 C3 Provisions and Reserves — all question types→Account STD 11 Commerce question papers→Gujarat Board STD 11 Commerce question papers→Gujarat Board question paper generator→

Similar questions

Write Journal Entry for the following transactions in the books of Ramesh :
$1$ Cash purchase $Rs.15,000$ and cash sales $Rs.14,000.$
$2$ A personal goods of $Rs.10,000$, brought to business.
$3$ Goods of Rs.$12,000$ purchased from Harsh.
→
From the following transactions, prepare the purchase book of Shri Meenakumari and post them in ledger:
On 1 – 7 – 2019, Goods of ₹ 9,000 are purchased from Heema at 20% trade discount.
On 5 – 7- 2019, Goods of ₹ 20,000 purchased from Jaya at 10% cash discount and paid half of the amount immediately.
→
From the following transactions write the journal proper in the books of Shri Atul Awasthi.
$(1)$ Brought goods of $₹ 10,000$ and machinery of $₹ 25,000$ to start the business.
$(2)$ Cellular phone of $₹ 20,000$ purchased for business from Kabir Stores.
$(3)$
$₹ 500$ is payable to Rohit for interest.
$(4)$ Goods of $₹ 12,000$ were stolen away from the shop, for which the insurance company accepted a claim of $75 \%$ of the amount.
$(5)$ Paid $₹ 800$ for bill of family doctor, which debited to sundry expense.
$(6)$ Rent received of $₹ 4000$. Pass the entry to close the account.
→
Write short-note on: $(1)$ Transaction of Dual Aspect Concept:
→
Give the meaning of reserve.
→
State the importance of financial statement.
→
Journalise the following transactions and post them in the ledger: $2019$
July $1$ Purchased goods of $Rs.45,000$ on cash $3$ Brought additional capital of $Rs. 60,000$ in the business.
→
Give difference between : Equal instalment method and Reducing balance method.
→
Write Journal Entry for Radha for the following transaction :
$1$ Life insurance premium $Rs.300$ and fire insurance premium $Rs.450$ paid by cheque.
$2$ Bank has approved over draft of $Rs.25,000.$
$3$ Bank has credited interest of $Rs.250$ and debited bank charges of $Rs.100.$
$4$ A cheque of $Rs.5,000$ issued for foreign visit of son of owner from business.
→
Explain differences: Capital expense and Revenue expense:
→