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Distinguish between revenue reserve and capital …

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Distinguish between revenue reserve and capital reserve?

Posted by Mohib Khan 4 years, 6 months ago

CBSE > Class 11 > Accountancy

1 answers

Sia ? 4 years, 6 months ago

Capital Reserve	Revenue Reserve
Definition
A capital reserve is created to finance long term projects for a business	Revenue reserve is created to meet unforeseen events in a business organisation
Reserve Source
To meet the specific purpose of meeting the accounting principles	To be used as reinvestment for company
Tenure
Can be used for long term projects	Can be used for short term purpose
For dividend payout
Cannot be distributed as dividend	Can be used for dividend payout
Example
Capital reserve is created by the sale of fixed assets	Revenue reserve is created from retained earnings

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