Reserves are the deposits of coins and money with which you count one to meet your obligations.
The concept of reserves as such is included within thesituation balance and generally the reserves are accumulated by the entities in order to prevent future expenses that cannot be met. The source of the reserves normally comes from the profits of the company and is part of the own funds.
Types of reservations
The classification of the reserves is grouped based on the results obtained by the company:
- Legal reserve: all companies are obliged to allocate 10% of their profits to reserves
- Statutory reserves: the statutes directly oblige companies to create their own reserves
- Stock reserves: derive from those shares acquired by other people in which, in order not to lose a part of the capital stock for a time, the shares are unavailable.
- Special reserves: for some reason, it is the law that sometimes dictates the constitution and characteristics of the reserves.
- Voluntary reserves: it is the society or company itself that establishes the reserve based on the legal type and the statutory type.