Reserves and surplus, Cost Accounting

Reserves and surplus or retained earnings usually occur out of profitable operations. This is a surplus not distributed through the firm as dividends. Conversely, these are profits that are to be retained inside the business. While a firm starts its operations this has no retained earnings. If in the first year this earns say Rs. 10,000 profit and chooses to distribute Rs. 5,000 like dividends, the reserves and surplus at the end of the year will be Rs. 5,000. Throughout its second year of operation if the firm forms a loss of Rs. 3,000 after that the retained earnings at the ending of the year will be Rs. 2,000. Retained reserves or earnings and surplus are in the nature of earned capital for the firm. We have seen previous that the dividends are restricted to retained earnings. It implies that at no point in time the original capital of the firm can be dispersed as dividend. Conversely, the capital originally contributed is to be kept intact.

This is possible to assign profits earned and accumulated like or reserves earnings to be earmarked for exact purposes. The earmarked retained are not distributed. Merely non-earmarked or free reserves are accessible for distribution as dividends.

Posted Date: 4/4/2013 1:49:29 AM | Location : United States







Related Discussions:- Reserves and surplus, Assignment Help, Ask Question on Reserves and surplus, Get Answer, Expert's Help, Reserves and surplus Discussions

Write discussion on Reserves and surplus
Your posts are moderated
Related Questions
DIFERENCE BETWEEN MARGINAL AND DIFFERENTIAL COSTING

A company has developed a new product which it will launch next month. During the initial production phase the company expects to produce 6,400 units in batches of 100 units. The f

The following data pertains to an investment proposal: Required investment $400,000 Annual cost savings $105,700 Projected life of investment 6 years Projected salvage value $0 Req

Corporation has determined the contribution margin ratio is 35% and the income tax rate is 40%. Required: A) Assume break-even volume in dollars is $1,500,000. What are total fixed

Absorption Costing and Marginal Costing Product costs are costs identified along with goods produced or purchased for resale. That costs are initially identified like part of

Goal Congruence - Behavioural Aspects of Standards A perfect variance analysis and standard costing system must enhance goal congruence between as: i. The goal of individua

Variable Overhead Efficiency Variance Budget for December 2003; Shs. Fixed Overheads 11,480 Variable Over

You have recently graduated from VU and are now working for a small accounting firm. The firm recently purchases MYOB software for internal use. Upon learning that you had learnt M

please concept clear me cost accounting for example, we manufacturing any product

CMM is an internationally recognized standard for calculating the maturity of an organization's software development processes and has become the primary benchmark multinational co