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Question
Distinguish between ‘general reserve’ and ‘specific reserve’
Distinguish Between
Solution
| Basis of Difference | General Reserve | Specific Reserve |
| Meaning | When the reserve is created without any specified purpose, the reserve is called general reserve. | When reserve is created for some specific purpose, the reserve is called specific reserve. |
| Usage | It can be used for any purpose. | It cannot be used for any purpose other than the specified purpose for which it is created. |
| Examples | Retained earnings, reserve funds, etc. | Debenture redemption reserve, dividend equalisation reserve, etc. |
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Types of Reserves-Secret Reserves
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