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  2. Accumulated profits

    Reserve accounting represents the company’s accumulated profits, which have been earned over the years, authorized by the board of directors. Unless specifically mentioned, these can be utilized without any legal restrictions for purchasing fixed assets, settlement of legal obligations, payment of statutory bonuses, and long-term debts.
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    What is a reserve in accounting?In accounting, reserves are portions of a company's profits that are set aside for specific or general purposes. The process of setting aside funding for specific purposes is called appropriation. Setting aside money for reserves can help keep businesses in good financial states by providing savings to handle future expenses.
    What is reserve accounting & why is it important?Reserves accounting ensures that should a business be faced with unexpected expenses, there is a way to pay for them. For example, if a moving company needs repairs done on a truck. This is an unexpected event that can implicate the profits of the business.
    What are revenue reserves?Revenue reserves are a certain amount of profits created from normal business operations. They can be further divided into two categories, general and specific reserves. General Reserves are not set aside for a specific purpose. Instead, they’re used to strengthen a company’s financial standing or cover unforeseen costs in the future.
    What is a business reserve?Businesses can use their reserves to pay debts, purchase assets, fund bonuses and make other payments. There are different types of reserves that have various purposes and come from distinct income streams, but two of the main types of reserves are capital reserves and revenue reserves.
     
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    WebMay 27, 2021 · Balance sheet reserves, also known as claims reserves, are accounting entries that show money set aside to pay future

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    WebJun 13, 2023 · Definition of Reserves. The term "reserves" refers to any profits retained in the business that do not have any of the attributes of provisions. Also, provisions that exceed the amount considered …

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    WebDec 6, 2021 · Reserves, otherwise known as retained earnings, are any profits that have been set aside for future use. A business can use them for any number of things, as there are no legal restrictions on using …

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