General Reserve, in short is the part of reserve amount kept by the company out of its profits for future purpose. Example, if the company might not expect any contingencies or unforseen happenings in the future. Usually, companies keep 20% aside the general reserves out of the total profit earned for a particular year or a certain period.
General reserve account cannot be used for purchases of building as general reserve accounts is fixed for some limited kind of transactions like
debit reserve accountcredit cash / bank
Revenue reserve is created out of revenue Profit . It is created out of Revenue Profit for exaple General Reserve, Dividend equalization reserve, Investment fluctuation reserve etc.
You record on the debit side an amount of 5000 that should be transferred to the general reserve account.
Asset side
how can we increase the general reserve
differentiate between general and specific reserve?
After redemption of debentures, debenture redemption reserve is to be transferred to general reserve.
State General Reserve Fund was created in 1980.
General reserve account cannot be used for purchases of building as general reserve accounts is fixed for some limited kind of transactions like
When debentures are redeemed payment is made from a reserve which is created at the time of purchase of such debentures,therefore at the time of payment first it is transferred to general reserve then as it is expenditure to company.
Revenue reserve is created out of revenue Profit . It is created out of Revenue Profit for exaple General Reserve, Dividend equalization reserve, Investment fluctuation reserve etc.
debit reserve accountcredit cash / bank
capital
Revenue reserve is created out of revenue Profit . It is created out of Revenue Profit for exaple General Reserve, Dividend equalization reserve, Investment fluctuation reserve etc.
You record on the debit side an amount of 5000 that should be transferred to the general reserve account.
By providing dividend to share holder