"Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R)
Assertion (A): Transfer to General reserves is shown in P & L Appropriation A/c.
Reason (R): General reserves are charge against the profits.
In the context of the above statements, which one of the following is correct? Codes: "
Assertion (A): Transfer to General reserves is shown in P & L Appropriation A/c.
Reason (R): General reserves are charge against the profits.
In the context of the above statements, which one of the following is correct? Codes: "
Answer & explanation
Correct answer: option 4
Reserves are not the charge against profit, its appropriation of profit. So it is shown in the P & L appropriation account.