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.