what is the difference between revenue reserve and capital reserve - Accountancy - Depreciation Provisions and Reserves

Question

what is the difference between revenue reserve and capital
reserve

Saurabh Mehta · Accepted Answer

Basis

Revenue
Reserves

Capital
Reserves

1
Created

Out of
the Revenue Profit

Out of
the Capital Profit

2
Purpose

For
improving the financial position of an entity and also for
distributing dividends to the shareholders

For
Writing-Off the Capital Losses

3
Examples

General
Reserve, Dividend Equalisation Reserve, Sinking Fund,
etc

Profit
on sale of Fixed Assets, Profit on revaluation of Fixed Assets,
etc

Basis	Revenue Reserves	Capital Reserves
1. Created	Out of the Revenue Profit	Out of the Capital Profit
2. Purpose	For improving the financial position of an entity and also for distributing dividends to the shareholders.	For Writing-Off the Capital Losses
3.Examples	General Reserve, Dividend Equalisation Reserve, Sinking Fund, etc.	Profit on sale of Fixed Assets, Profit on revaluation of Fixed Assets, etc