Reserve and surpluses

Reserves are the amounts set aside for future use.

Surplus is an excess gain which arises on a transaction. Example, surplus gain when currency is exchanged between USD and INR at a higher exchange rate from the date when purchased. 

"Reserves and surplus" is a significant head on the liabilities side of the balance sheet forming part of the shareholders' funds.

"Reserves and surplus"includes Statutory and voluntary reserves ; capital and revenue reserves; and free and specific reserves.and also include security Premium ect..

“free reserves” means such reserves which, as per the latest audited balance sheet of a company, are available for distribution as dividend and which company can freely drawn.

Free reserves is also part of reserves and surplus.

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