General Reserve A/c
Capital Reserve A/c
Share Capital A/c
None of the above
Answer is Right!
Answer is Wrong!
The correct answer is: B. Capital Reserve A/c
A capital reserve is a reserve that is created when a company reduces its share capital. The balance in the capital reduction account after writing off accumulated losses is transferred to the capital reserve account.
A general reserve is a reserve that is created to meet unexpected expenses or to provide for future contingencies. A share capital account is an account that records the amount of money that has been raised by a company through the issue of shares.
The following are the reasons why the balance in the capital reduction account after writing off accumulated losses is transferred to the capital reserve account:
- To maintain the company’s financial health.
- To comply with accounting standards.
- To provide a cushion for future losses.
- To protect the interests of shareholders.
I hope this helps! Let me know if you have any other questions.