Which of the following is the capital reserve of a company?

A. Accumulated depreciation
B. Retained profit
C. Share premium
D. Loss on forfeited shares

Correct Answer:

Option B – Retained profit

Explanation

Capital reserve is made out of capital profits earned due to the sale of fixed assets at a price greater than its cost or profit on the reissue of forfeited shares. So Capital reserve is created when there is capital profit i.e. profit on sale of assets or upward revaluation of assets. Retained capital is a capital reserve.