There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion (A):  Reserve Capital and Capital Reserve are synonymous terms.
Reason (R):  Reserve Capital is the capital that the company resolves to call on its winding up. Capital Reserve is a reserve to which capital profits are transferred.

Assertion (A) is not correct but the Reason (R) is correct.

The correct answer is option 4- Assertion (A) is not correct but the Reason (R) is correct.

Assertion (A):  Reserve Capital and Capital Reserve are synonymous terms. THIS IS FALSE. Reserve Capital and Capital Reserve are not synonymous terms. Reserve Capital refers to the capital that the company can call upon for a specific purpose, usually during its winding up, while Capital Reserve is a reserve created from capital profits.

Reason (R):  Reserve Capital is the capital that the company resolves to call on its winding up. Capital Reserve is a reserve to which capital profits are transferred. THIS IS TRUE. The Reason (R) accurately distinguishes between the two terms, explaining that Reserve Capital is called upon during winding up, whereas Capital Reserve is created from capital profits.