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Question
Which one of the following can be used by a company to write off any loss on issue of debentures?
Options
Investment Fluctuation Fund
Machinery Replacement Fund
Workmen Compensation Reserve
General Reserve
MCQ
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Solution
General reserve
Explanation:
A general reserve is a fund set up for no specific reason. Since a loss on the sale of debentures is a capital loss, it can be written off against the General Reserve, which is an easy way to cover these kinds of losses.
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