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WAEC Financial Accounting 2011 Question 36

Question 36

Company Accounts

Which of the following is not an example of capital reserve?

  1. A.Share premium
  2. B.Retained profits
  3. C.Surplus on revaluation of assets
  4. D.Pre-incorporation profits
Show the answer and explanation

Answer: B (Retained profits)

Explanation

Retained profits come from normal trading and can be paid as dividends, so they are a revenue reserve; the other three are capital reserves.