The entry to create a general reserve is usually:
A) Dr General reserve$\quad $ $\quad $ Cr Retained profits.
B) Dr Retained profits$\quad $ $\quad $ Cr General reserve.
C) Dr Profit and loss$\quad $ $\quad $ Cr General reserve.
D) Dr Expense$\quad $ $\quad $ $\quad $ Cr General reserve.

Question

Quizplus · Accepted Answer

The entry to create a general reserve is to debit Retained profits (which represents surplus profits from previous years) and credit General reserve account. Therefore, option B is correct. Option A is incorrect as it debits General reserve, which is not an account to be debited. Option C is incorrect because Profit and loss account represents the current year's profit or loss and not the accumulated profits of previous years. Option D is incorrect as there is no expense associated with the creation of a general reserve.

The Entry to Create a General Reserve Is Usually: A) \quad

The Entry to Create a General Reserve Is Usually:
A) $\quad$