1.

What is specific reserve? State its types.

Answer»

Meaning: When a revenue reserve is created out of profit and loss appropriation account for specified purpose is known as Specific reserve or Special reserve. Such reserve is used for the same purpose for which it is created. When the purpose of such a reserve is over, the balance of Specific reserve is to be transferred to the General reserve and used for any other purpose.

Types of specific reserve :

  • Investment fluctuation fund,
  • Debenture redemption fund,
  • Sinking fund,
  • Dividend equalization fund and
  • Workers accident compensation reserve (fund).


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