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 us conclude the statement clearly about the Capital. Word capital will create dynamic Change in the Business world. Students refer to 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 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. The Capital Reserve is disclosed on the Reserve and Surplus Head. Creation of the Capital Reserve is mandatory as per it prevents the company from winding up the capital reasons. The Capital Reserve is useful to write off Fictitious Assets or Capital losses and Many More.
What is the Reserve Capital?
Reserve capital means the Part of Uncalled capital or Shares amount still on Hold is called 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 as Authorized Capital.
Difference Between Capital Reserve and Reserve Capital
|Basis||Capital Reserve||Reserve Capital|
|Meaning||The Profits earned through the special transaction by the company which is not distributed as a dividend to shareholders are known as Capital Reserve.||The Part of Uncalled capital is known as Reserve Capital|
|Created For||Capital Profits||Authorized capital|
|Disclosure||Appears on the Equity & Liabilities Side||Not Disclosed at All|
|Need for Creation||Compulsory||Voluntary|
|Specific Needs||No Such Conditions||Under the Special Resolutions|
|Useful’s||For Fictitious Assets or Capital Losses||When the company in the Stage of Winding Up|