Question

Reserve capital is that portion of the ______ capital that can be called only in the event of winding up of the company.

Options

• called-up

• uncalled

• paid-up

• subscribed

Answer 1

Reserve capital is that portion of the uncalled capital that can be called only in the event of winding up of the company.

Explanation:

Reserve Capital is created when a company decides that a part of its uncalled capital will be used only if the company is closed down or goes into liquidation. This amount cannot be used during normal business and is kept as a protection for creditors in case of winding up.