What is the Difference Between capital Reserve and Reserve Capital ?


Most of the students raised the question about the Difference between Capital Reserve and Reserve Capital . Let we conclude the statement clearly about the Capital. The Word capital will create dynamic Change in the Business world. Students refer the below given information about the Capital Reserve and Reserve Capital Difference.

What is Capital Reserve ?

Capital Reserve means the part of the Profits which is reserved by the company for the Future Needs or Long Term Projects to write Off Capital Expenses.  Capital Reserve is created out of profits and it appears on the Equity and Liabilities Side of the balance Sheet. Capital Reserve is disclosure on the Reserve and Surplus Head. Creation of the Capital Reserve is mandatory as per it prevent the company for the winding up of the capital reasons. The Capital Reserve is useful to write off the Fictitious Assets or Capital losses and Many More.

What is Reserve capital ?

Reserve capital means the Part of Uncalled capital or Shares amount still on the Hold is called as Reserve Capital. Reserve capital is created out of the Authorized capital. As per the companies Act 2013 Reserve capital is not Disclosed at all.  No provision will mention the Authorized capital to make a Reserve Capital but it will be generated Authorized Capital.

Difference Between capital Reserve and Reserve Capital

BasisCapital ReserveReserve Capital
MeaningThe Profits earned through the special transaction by the company which is not distributed as dividend to share holders is known as Capital Reserve.The Part of Uncalled capital  is known as Reserve Capital
Created ForCapital ProfitsAuthorized capital
DisclosureAppears on the Equity & Liabilities SideNot Disclosed at All
Need of CreationCompulsoryVoluntary
Specific NeedsNo Such ConditionsUnder the Special Resolutions
Useful’sFor Fictitious Assets or Capital LossesWhen the company in  Stage of Winding Up


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