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Reserve

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(Querist)
22 March 2017 How does reserve preserve money since we can easily take out cash from bank?
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CA Gopal Somani

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CA Gopal Somani (Expert)
22 March 2017 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.
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