Reserve & Surplus

Reserves & Surplus form part of a company’s shareholders’ equity in the balance sheet. It represents the portion of profits and other funds that the company has retained and not distributed as dividends, plus certain capital reserves.

It typically includes:

• General Reserve: Profits set aside for future needs or contingencies.
• Securities Premium Reserve: Extra amount received over face value of shares.
• Retained Earnings (Surplus): Accumulated profits after paying dividends.
• Other Reserves: Capital redemption reserve, revaluation reserve, etc.

In simple terms: Reserves & Surplus = Company’s accumulated profits + special reserves, kept aside for growth, expansion, or financial stability.