Question
Reserved Capital and Capital Reserve :
| Reserved Capital | Capital Reserve |
| $(1)$ When board of directors think that they have sufficient called up capital and no further capital is needed in future then by special resolution passed in shareholder’s meeting regarding uncalled capital is kept as reserve, then that capital is called reserved capital. | $(1)$ Reserve created from capital profit is called capital reserve. It is not created from the normal transaction of business. |
| $(2)$ When company going to be liquidated or winding up then this amount of capital can be called from shareholders. | $(2)$ This can not be possible in capital reserve. |
| $(3)$ Reserved capital can be created from the starting of the company proceeding. | $(3)$ Capital reserve can be created at any time in the business. |
| $(4)$ If there is sufficient called up capital then only reserved capital can be created. | $(4)$ If there is capital profit then only capital reserve can be created. |
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| Particulars | $(Rs.)$ |
| Purchase of land | $1,88,000$ |
| Equity shares issued | $1,45,000$ |
| Redemption of preference shares | $60,000$ |
| Redemption of debentures | $70,000$ |
| Borowed bank loan | $90,000$ |
| Debenture interest paid | $6,000$ |
| Dividend paid | $8,000$ |
| Dividend-interest received | $9,000$ |
| Sale of furniture | $32,000$ |
| Purchase of machine | $68,000$ |
| Interest received on investments | $13,000$ |
| Paid for patents | $19,000$ |