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reserves and surplus are shown into liability side of the financial statiment, since reserve is the money set aside from the capital for future use hence defining surplus as a debit in the business thus attributing to its liabiltiness,

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What is the difference between reserves and surplus?

A reserve is a planned amount, a surplus is unplanned.


How do you calculate cost of reserves and surplus?

To calculate the cost of reserves and surplus, you typically assess the opportunity cost associated with holding reserves instead of investing them in profitable ventures. This can be done by estimating the expected return on alternative investments and comparing it to the returns generated by the reserves. Additionally, you can consider factors like inflation and the cost of capital to determine the effective cost. Ultimately, the cost of reserves and surplus reflects the potential income foregone by not utilizing those funds for growth-oriented activities.


The link between a balance of payments surplus and rising foreign exchange reserves?

A balance of payments surplus occurs when a country's exports and financial inflows exceed its imports and financial outflows, leading to an accumulation of foreign currency. This surplus results in rising foreign exchange reserves, as the central bank purchases the excess foreign currency to stabilise the local currency and manage inflation. Consequently, increased foreign exchange reserves can enhance a country's ability to withstand economic shocks and boost investor confidence. Thus, a balance of payments surplus directly contributes to the growth of foreign exchange reserves.


Ths amount of the mutual insurer's owners equity that has not been set aside for any specific purpose or money reserves?

Surplus Reinsurance


What are Forex Reserves?

Forex reserves are financial assets in diverse foreign currencies, held by central banks and monetary authorities of countries. Most countries maintain their Forex reserves in the major currencies like the dollar, yen, pound, gold, e.t.c. The essence of the reserve is to shield or backup liabilities or form of savings, which generates interest.See: en.wikipedia.org/wiki/Foreign-exchange_reserves

Related Questions

Is a reserve and surplus current liability?

No, a reserve and surplus are not considered current liabilities. Instead, they are part of shareholders' equity on a company's balance sheet. Reserves are typically funds set aside for specific purposes, while surplus refers to the retained earnings that exceed the initial capital contributed by shareholders. Current liabilities, on the other hand, are obligations the company expects to settle within one year.


What are reserves and surplus in finance?

What is reserve & surplus in accounts


What is the entry for reserves and surplus?

entries for Reserve & surplus


What is net loss reserves to surplus ratio?

The net loss reserves to surplus ratio is a financial metric used in the insurance industry to assess the adequacy of an insurer's reserves relative to its surplus. It is calculated by dividing the net loss reserves (the funds set aside to pay future claims) by the surplus (the difference between assets and liabilities). A lower ratio indicates a stronger financial position, suggesting that the insurer has sufficient surplus to cover potential claims, while a higher ratio may signal potential financial strain. Monitoring this ratio helps regulators and stakeholders gauge the insurer's risk management and financial health.


What is the difference between reserves and surplus?

A reserve is a planned amount, a surplus is unplanned.


What is the meaning of reserves and surplus?

Amount appropriated out of earned surplus (retained earnings) for future planned or unforeseen expenditure.


How do you calculate cost of reserves and surplus?

To calculate the cost of reserves and surplus, you typically assess the opportunity cost associated with holding reserves instead of investing them in profitable ventures. This can be done by estimating the expected return on alternative investments and comparing it to the returns generated by the reserves. Additionally, you can consider factors like inflation and the cost of capital to determine the effective cost. Ultimately, the cost of reserves and surplus reflects the potential income foregone by not utilizing those funds for growth-oriented activities.


What is the revaluation surplus?

Companies from time to time do the process of revaluating its assets and liabilities for many reasons like liquidation or selling business or any other reason. From the process of revaluation its assets and liabilities surplus or defecit generate. If there is revaluation surplus it means that assets of company has more appreciated then assets of the companies reduced in value.


Where and under which heading is the unclaimed dividend disclosed in the balance sheet of the company?

reserves surplus


The link between a balance of payments surplus and rising foreign exchange reserves?

A balance of payments surplus occurs when a country's exports and financial inflows exceed its imports and financial outflows, leading to an accumulation of foreign currency. This surplus results in rising foreign exchange reserves, as the central bank purchases the excess foreign currency to stabilise the local currency and manage inflation. Consequently, increased foreign exchange reserves can enhance a country's ability to withstand economic shocks and boost investor confidence. Thus, a balance of payments surplus directly contributes to the growth of foreign exchange reserves.


How reserves are part of capital?

Reserves are maintained from profit of current year business and profit is part of capital that's why reserves are also part of capital as if it is not maintained separately it will be included in profit or capital.


How do you figure out retained earnings?

by balance sheet under reserves and surplus heading otherwise in profit and loss appropriation a/c