Which of the following is not a revenue reserve?

Correct option is D

A revenue reserve is created out of revenue profits and is available for distribution as dividends (unless earmarked for a specific purpose). Examples include general reserve, investment fluctuation fund, workmen compensation fund, etc.
Securities Premium Reserve (SPR), however, is not a revenue reserve. It is created from capital profits arising from the issue of shares at a premium. As per Section 52 of the Companies Act, 2013, the Securities Premium Reserve is a capital reserve, and its utilisation is restricted for specific purposes such as:
· Issue of bonus shares
· Writing off preliminary expenses
· Writing off discount/loss on issue of shares or debentures
· Providing premium payable on redemption of preference shares or debentures
Thus, SPR cannot be used for dividend distribution, which makes it a capital reserve, not a revenue reserve.
Information Booster (Important Points)
1. Revenue reserves originate from operational profits and are generally free for distribution (unless earmarked).
2. Capital reserves originate from capital profits (share premium, forfeiture, revaluation gains) and cannot be distributed as dividends.
3. Workmen Compensation Fund and Investment Fluctuation Fund are specific revenue reserves, created for a particular contingency.
4. Debenture Redemption Reserve (DRR) is also a revenue reserve, created out of profits to ensure redemption of debentures.
5. Securities Premium Reserve has strict statutory restrictions and is treated as part of shareholders' funds, but not revenue.
Additional Information
· (a) Workmen Compensation Fund – Incorrect because it is a revenue reserve set aside to meet future liability relating to workers’ compensation.
· (b) Debenture Redemption Reserve – Incorrect; DRR is created out of profits to safeguard redemption of debentures, therefore it is a revenue reserve, not a capital reserve.
· (c) Investment Fluctuation Fund – Incorrect; this is a contingency reserve, created from profits to meet losses on investments, and is therefore a revenue reserve.