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If General Reserve appears on liabilities side of balance sheet why is it not treated as outside liability?

Answer and explanation

Correct answer: Because it is internal accumulation of profit

General Reserve is created from firm profits and is owners claim. Therefore it is not payable to outside creditors.

Related tags

General ReserveLiabilities SideConceptReservesReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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