Reserve which is not created for any specific purpose is called General Reserve. The purpose of this reserve may be the strengthening the financial position of the business entity, generating more working capital, to off set future losses or for unknown contingencies. Corporations do not distribute all the operating earnings to their stockholders but keeps some portion of its earnings for future unknown events; the balance of earnings which is not distributed to the stockholders may be transferred to General Reserve or to Specific Reserve. General Reserve is not for specific purpose while Specific Reserve is created for some specific purposes e.g company wants to extend its building area or wants to buy new technologies etc. It is the part of Profit & Loss Appropriation A/C. and it can be used for any purpose after fulfilling the different conditions.
FEED BACK & COMMENTS WILL HIGHLY BE APPRECIATED.
