Accountancy Part BFinancial Statements of a Company

Which of the following items are included under Reserve and Surplus?…

Which of the following items are included under Reserve and Surplus?

(A) Security Premium reserve

(B) Revaluation reserve

(D) Reserve Capital

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → (A), (B) and (C) only

Under Schedule III, Reserves and Surplus holds the reserves the company has built up and the surplus in the Statement of Profit and Loss. Uncalled share capital, whatever it is reserved for, is still share capital.

(A) Security Premium reserve — Correct. The premium received on issue of securities is a reserve listed under Reserves and Surplus.

(B) Revaluation reserve — Correct. The gain on revaluing assets is kept as a reserve under the same head.

(C) Share option outstanding account — Correct. The value of options granted to employees under ESOP is shown within Reserves and Surplus until the options are exercised.

(D) Reserve Capital — Incorrect. Reserve capital is the part of uncalled capital to be called only on winding up; it is not a reserve and is not shown under Reserves and Surplus.

NCERT (2026-27 edition):
Types of Financial Statements

Extract from the NCERT textbook

NCERT (2026-27 edition):
Categories of Share Capital – “… • 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.”