Free Reserves

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Faiz Ahmed

Faiz Ahmed (Querist)
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08 August 2010 Is Profit & Loss A/c (Cr. balance) a free reserves??? Kindly explain with logic??

CA Ravi Sisodia

CA Ravi Sisodia (Expert)
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08 August 2010 CREDIT BALANCE MEANS HAVE A POSITIVE BALANCE OF FUND. INCOME IS EXCEED THEN EXPENSES. IT'S AVAILABLE FOR DISTRIBUTION OF DIVIDEND.

Faiz Ahmed

Faiz Ahmed (Querist)
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08 August 2010 Kindly tell whether it(P&l) can be used for bonus issue or not? Please provide reasoning for the same.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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08 August 2010 This is a conceptual question.

From the nomenclature itself; Free reserves means reserves which can be utilized freely.

Tell me; when you earn money and you pay taxes thereon; then whether you can utilize the remaining profits freely or not ?

According to you; what does it mean the credit balance of profit and loss account. A profit or a loss or anything else ?

Hope your query is solved.

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Faiz Ahmed

Faiz Ahmed (Querist)
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08 August 2010 Thnx , I understood now.