Question

Which of the following statements does not relate to ‘Reserve Capital’:

Options

• It is part of uncalled capital of a company.

• It cannot be used during the lifetime of a company.

• It can be used for writing off capital losses.

• It is part of subscribed capital.

Answer 1

It can be used for writing off capital losses.

Explanation:

Reserve capital is the portion of uncalled share capital that may be called only on winding up, so it isn’t usable during the company’s life. Using reserves to write off capital losses is a feature of Capital Reserve, not Reserve Capital.