Gujarat BoardEnglish MediumSTD 11 CommerceAccountP2 C3 Provisions and Reserves3 Marks
Question
Write short note on Revenue reserve.
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Answer
Profit generated out of purchase and sale of goods and other regular activities of business is called as revenue profit. The reserve created out of such revenue profit is called as Revenue reserve.Uses _ Revenue reserve is very useful to increase financial soundness of business. Moreoverrevenue reserve can also be used to pay contingent expenses or losses of the business.Classification _ Revenue reserve can be classified Into three catagories_
$(1)$ General reserve,$(2)$ Specific reserve and $(3)$ Secret reserve_
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