There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.
Assertion (A): Reserve Capital is a part of Subscribed Capital which the company decides to call at the time of winding up of the company.
Reason (R): Share Capital, which the companies resolve to call upon its winding up, is termed Reserve Capital.
Answer & explanation
Correct answer: option 1
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.