Which of the following is the capital reserve of a company?
Answer Details
Capital reserve is a portion of a company's profits that is kept aside and not distributed as dividends to shareholders.
The most common form of capital reserve is "Retained profit". This is the profit that a company has made over time, but instead of distributing it to shareholders, the company keeps it to reinvest in the business or use it in case of any emergencies.
"Share premium" is another type of capital reserve. It refers to the amount paid by a shareholder for a share in a company, which is in excess of the nominal value of the share. This excess amount can also be kept as a reserve.
"Accumulated depreciation" refers to the total amount of depreciation expense recorded for an asset over its useful life. It is not considered a capital reserve as it represents a reduction in the value of an asset and is not a source of funds for the company.
"Loss on forfeited shares" refers to the loss a company may incur when it cancels or repurchases its own outstanding shares. This is not a capital reserve as it represents a loss, not a source of funds for the company.