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Depreciation, Provisions and Reserves — Account STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceAccountDepreciation, Provisions and Reserves3 Marks
Question
Distinguish between ‘general reserve’ and ‘specific reserve’.
✓

Answer

Basis of Difference
General Reserve
Specific Reserve
Meaning
When the reserve is created without any specified purpose, the reserve is called general reserve.
When reserve is created for some specific purpose, the reserve is called specific reserve.
Usage
It can be used for any purpose.
It cannot be used for any purpose other than the specified purpose for which it is created.
Examples
Retained earnings, reserve funds, etc.
Debenture redemption reserve, dividend equalisation reserve, etc.

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