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Difference Between Revenue Reserve and Capital Reserve

BASIS FOR COMPARISON REVENUE RESERVE CAPITAL RESERVE
Meaning Revenue Reserve refers to the sum of money retained in business, so as to meet out future contingencies. Capital Reserve alludes to a fund, that is created to finance long term project or write off capital expenses.
Source Revenue profit of the firm are the source of revenue reserves. Capital profit of the firm are the source of capital reserve.
Aim To meet unforeseen contingencies and improve entity’s financial position. To adhere to the statutory requirements or accounting principles.
Utilization Based on the type of reserve it can be utilized for any or particular purpose only. Capital reserve can be utilized for the purpose for which it is created.
Dividend It is freely available for distribution as dividend. It is not available for distribution as dividend.

 

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