{"id":51905,"date":"2024-04-15T23:31:33","date_gmt":"2024-04-15T23:31:33","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=51905"},"modified":"2024-04-15T23:31:33","modified_gmt":"2024-04-15T23:31:33","slug":"which-of-the-following-is-not-a-capital-reserve","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-is-not-a-capital-reserve\/","title":{"rendered":"Which of the following is not a capital reserve?"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;Premium on issue of shares&#8221; option2=&#8221;Profits prior to incorporation&#8221; option3=&#8221;Dividend equalisation reserve&#8221; option4=&#8221;Reserve created out of profit on the sale of fixed assets&#8221; correct=&#8221;option3&#8243;]<!--more--><\/p>\n<p>The correct answer is C. Dividend equalisation reserve.<\/p>\n<p>A capital reserve is a reserve that arises from a capital transaction, such as the issue of shares or the sale of fixed assets. Profits prior to incorporation are not capital transactions, so they are not capital reserves. Premium on issue of shares is a capital reserve because it arises from the issue of shares. Reserve created out of profit on the sale of fixed assets is also a capital reserve because it arises from the sale of fixed assets.<\/p>\n<p>A dividend equalisation reserve is a reserve that is created to smooth out fluctuations in dividends. It is not a capital reserve because it does not arise from a capital transaction.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;Premium on issue of shares&#8221; option2=&#8221;Profits prior to incorporation&#8221; option3=&#8221;Dividend equalisation reserve&#8221; option4=&#8221;Reserve created out of profit on the sale of fixed assets&#8221; correct=&#8221;option3&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-51905","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Which of the following is not a capital reserve?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-is-not-a-capital-reserve\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Which of the following is not a capital reserve?\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;Premium on issue of shares&#8221; 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