Does reserve really set aside funds ? What if all the cash in hand as well as bank is utilized, creating reserve has no meaning.
resverve is a body of troops withheld from action to reinforce or protect others,
or additional to the regular forces and available in an emergency it is
in form of investment or debtors still not received or
in form of given loan which is not received
high reserve is high it means that company is going
on good condition
CA Gopal Somani
(Consultant)
(2057 Points)
Replied 26 March 2017
Yes, Reserve set aside funds.
Reserve does not necessarily means that it is deposited in bank, It can be invested in any assets (Fixed or current). Reserve are created from profit so if a firm/company is having more profit then it can have more reserves. All those profits/reserve may not be kept as cash/Bank it can be invested in fixed assets or some current assets.
GST Live Certification Course (39th Batch) - April 2024 (Weekend Batch) (With Certificate)
"Live class on Python for Financial Analysis: Unlocking Efficiency in Accounting and Finance"
CAclubindia
