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      Question

      Which of the following is not true about capital

      reserves?
      A Capital reserve is created from capital profits (e.g., revaluation surplus) Correct Answer Incorrect Answer
      B It is usually not available for distribution as dividend Correct Answer Incorrect Answer
      C It is part of shareholders’ funds Correct Answer Incorrect Answer
      D It is used to write off revenue losses Correct Answer Incorrect Answer
      E It can be used to issue bonus shares in some cases per law Correct Answer Incorrect Answer

      Solution

      Capital reserves are generally not used for writing off revenue losses; revenue reserves are used.

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