Which of the following is a revenue reserve?
Correct answer: C. Debenture redemption reserve
- A. Capital redemption reserve
- B. Security premium account
- C. Debenture redemption reserve
- D. Capital reserve
Explanation
A debenture redemption reserve is created from revenue profits, although it is set aside for a specific purpose, so it is classified as a revenue reserve. Capital redemption reserve and securities premium are capital reserves or capital-type balances.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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