Why in balance sheet " reserve fund " displayed in liabilities sides ?...... Reserve Fund is collected fund of company/firm or it should be shown in assets side......... Please clarify me......
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Accounting principle based
Replies (3)
Reserve Fund is a portion of profit retained by the Company for its future use. It can also be termed as UNDISTRIBUTED PROFIT. The shareholders who are the owners of the Company is also the owner of this profit earned by the company. Hence this is ideally SHAREHOLDERS FUND and is a liability for the Company.
Reserve Fund is Liability of Entity because it is a fund of Shareholde or Partner or Properiter and Reserve Fund amount's application shown in Asset side in form of Cash, Investment, Fixed Asset etc.
This is main reason of tally the Balance Sheet
Total Asset Side = Total Liability Side
Thanks everyone 4 your replies...........
i really wants answer as given by K.CHITRA .......... thanks 4 your response........
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