Reserve capital is not a part of ________a)authorised capitalb)subscribed capitalc)unsubscribed capitald)issued share capitalCorrect answer is option 'C'. Can you explain this answer?

Question

Answer

Explanation:
Reserve capital is a part of the subscribed capital. It is an amount of capital that is not paid for by shareholders but is kept in reserve by the company for future use. Reserve capital is created out of the profits earned by the company and is not a part of the authorized capital.

Authorized capital:
Authorized capital is the maximum amount of capital that a company is authorized to raise by issuing shares. This is specified in the company’s memorandum of association.

Subscribed capital:
The subscribed capital is the portion of the authorized capital that has been subscribed or taken up by the shareholders.

Unsubscribed capital:
Unsubscribed capital is the portion of the authorized capital that has not been subscribed by the shareholders. This capital can be issued later if the company needs to raise more funds.

Issued share capital:
Issued share capital is the portion of the subscribed capital that has been issued by the company and is held by the shareholders.

Therefore, the correct answer is option 'C' as reserve capital is not a part of the unsubscribed capital.

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