Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:
Which one is created out of the capital profits of the company?
Options:
Capital reserve
Reserve Capital
Called up capital
Both options 1 and 2
Correct Answer:
Capital reserve
Explanation:
There are two types of reserves in a company, namely, Capital Reserve and Revenue Reserve. A capital reserve is a type of reserve that is created from capital profits.