Reserves and Surplus includes : (A) Statement of Profits and Loss (Cr…

Reserves and Surplus includes :

(A) Statement of Profits and Loss (Credit Balance)
(B) Reserve Capital
(C) Securities Premium Reserve
(D) Capital Redemption Reserve
(E) Share Application Money Pending Allotment

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → (A), (C), and (D) Only

Under Schedule III, Reserves and Surplus holds the reserves of the company and the balance of the Statement of Profit and Loss; share capital items and money pending allotment are shown under their own heads.

(A) Statement of Profits and Loss (Credit Balance) — True. The credit balance is the “Surplus” part of the head.

(B) Reserve Capital — False. Reserve capital is the part of uncalled share capital kept to be called only on winding up; it is part of share capital, not a reserve.

(C) Securities Premium Reserve — True. It is listed under Reserves and Surplus.

(D) Capital Redemption Reserve — True. It is listed under Reserves and Surplus.

(E) Share Application Money Pending Allotment — False. It is disclosed separately in the Balance Sheet, not as a reserve.

NCERT (2026-27 edition):
Reserve and Surplus

Extract from the NCERT textbook

NCERT (2026-27 edition):
Share Capital of a Company – “… • Reserve Capital: A company may reserve a portion of its uncalled capital to be called only in the event of winding up of the company. Such uncalled amount is called ‘Reserve Capital’ of the company. It is available only for the creditors on winding up of the company.”

NCERT (2026-27 edition):
Share application money pending allotment – “Share application money not exceeding the issued capital and to the extent non-refundable shall be classified as non-current. It will be shown on this face of balance sheet as share application money pending allotment.”