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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.
XYZ Pvt Ltd is a private company incorporated in Australia, and manufactures handbags. The opening balance of XYZ Pvt Ltd's franking account on 1 July 2010 was $nil. During the 201
Judy's mother, Sarah, died on July 2, 2006, leaving Judy her entire estate. Included in the estate was Sarah's residence (325 Oak Street, Cincinnati, OH 45211). Sarah's basis in th
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The Accountant has also asked for you to assist in preparing the statement of financial position (balance sheet) for the Construction in Building partnership for the year ended 30
explain the practical application of differential costing with the help of suitable example.
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What is Labor Cost Control Management?
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Material Price Variance (MPV) This may be described as the difference amoung the actual price and the standard price of the materials consumed. MPV = Actual quantity used (S
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