Download App

Provisions and Reserves — Account STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceAccountProvisions and Reserves4 Marks
Question
What are Reserves?
✓

Answer

Reserves are the amounts set aside out of profits. It is an appropriation of profits or accumulated profits to strengthen the financial position of the business. Reserves are not set aside to meet a liability or depreciation in the value of assets but is set aside to meet known or unknown contingency that may arise in future.
Examples are General Reserve, Reserve for Expansion, Reserve for Equalisation of Dividends, Reserve for Increased Costs of Replacement, etc.

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 "4 Marks Question" from Provisions and Reserves→Provisions and Reserves — all question types→Account STD 11 Commerce question papers→CBSE Board STD 11 Commerce question papers→CBSE Board question paper generator→

Similar questions

Prepare accounting equation from the following:
  1. Started a business with cash ₹ 1,00,000 and goods worth ₹ 20,000.
  2. Sold 50% of above goods at a profit of ₹ 2,000 on credit to Ram.
  3. Rent paid ₹ 5,000.
  4. Ram paid 50% of his balance in cash.
→
How will be the following errors rectified?
  1. Purchases Book is overcasted by ₹ 10,000.
  2. Purchases Return Book is overcasted by ₹ 1,000.
  3. Purchases Return Book’s balance is carried forward in excess by ₹ 100.
  4. Purchases Book’s balance is carried forward in excess by ₹ 1,000.
→
Prepare Accounting Equation on the basis of the following transactions:
  1. Started business with cash ₹ 70,000.
  2. Credit purchase of goods ₹ 18,000.
  3. Payment made to creditors in full settlement ₹ 17,500.
  4. Purchase of machinery for cash ₹ 20,000.
→
On April 01, 2010 Jain & Sons purchased a second hand plant costing ₹ 2,00,000 and spent ₹ 10,000 on its overhauling. It also spent ₹ 5,000 on transportation and installation of the plant. It was decided to provide for depreciation @ 20% on written down value. The plant was destroyed by fire on Oct. 31, 2013 and an insurance claim of ₹ 50,000 was admitted by the insurance company. Prepare plant account assuming that the company closes its books on March 31, every year.
→
Explain determinants of the amount of depreciation.
→
Why assets are classified into current and non-current?
→
Pass Journal entry for purchase of goods by Amrit, Delhi from Add Gel Pens, Delhi for ₹ 15,000 less Trade Discount 10% and Cash Discount 3%. CGST and SGST is levied @ 6% each. Assume payment is made at the time of purchase.
→
Name four errors which cannot be disclosed by preparing a Trial Balance.
→
Record the following transaction in simple cash book for November 2016:
 
 
₹
01
Cash in hand
12,500
04
Cash paid to Hari
600
07
Purchased goods
800
12
Cash received from Amit
1,960
16
Sold goods for cash
800
20
Paid to Manish
590
25
Paid cartage
100
31
Paid salary
1,000
→
“Revenue earned and cost of earning that revenue should be properly identified for a period." Explain this statement.
→