There are two types of reserves.
What are the differences between revenue reserves and capital reserves?© BrainMass Inc. brainmass.com March 4, 2021, 11:06 pm ad1c9bdddf
A revenue reserve is a specified amount set aside, and placed into either a general reserve account, or a specific reserve account. The money is taken out of regular revenues that the company has earned. Monies that are placed into the general reserve account are used when they are later needed, by management's discretion. The monies in the account can be used for any business purpose that management sees as necessary. The most common reason that funds are used from the general reserve account is to cover any liabilities that the ...
The solution provides a detailed discussion comparing revenue reserves with capital reserves, and provides references.