Question
In the preparation of a company's balance sheet, various
classifications of capital are recorded to reflect the financial structure and ownership equity of the company. However, not all types of capital are displayed in the balance sheet. Which type of capital listed below is typically not shown in the company’s balance sheet?Solution
Reserve capital is a portion of the company's subscribed capital that has not been called up except in the event of winding up. It is not shown in the company's balance sheet as it represents the capital that the company can call upon only in a specific circumstance, typically during liquidation.
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