Reserve is nothing but a buffer......we have two reserves like Capital Reserve and General Reserve..... Fow acquiring Capital Items such reserve is useful......for all general items general reserve is useful
The word reserves is always used along with Surpluses.
Surplus means any trading/business surplus in any financial year.
While reserve means money kept aside for specific purpose.
Example: General Reseve (kept aside for general contingency purpose) Debenture Redemption Reserve (kept aside for redemption of debentures) Capital Redemption Reserve (kept aside for redemption of equity capital (this is only if at all shares are to be redeemed)) etc
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