Capital reserve

Capital reserve,

Definition of Capital reserve:

  1. The term capital reserve is sometimes used for the capital buffers that banks have to establish to meet regulatory requirements and can be confused with reserve requirements, which are the cash reserves the Federal Reserve requires banks to maintain.

  2. A resource created by the accumulated capital surplus (not revenue surplus) of an organization, such as by an upward revaluation of its assets to reflect their current market value after appreciation. Allocating such sums to capital reserve means they are permanently invested and will not be paid as dividends.

  3. A fund or account set aside for major long-term investment projects or other anticipated expenses.

  4. A capital reserve is an account in the equity section of the balance sheet that can be used for contingencies or to offset capital losses. It is derived from the accumulated capital surplus of a company, created out of capital profit.

How to use Capital reserve in a sentence?

  1. Attaining the equipment required can drain the capital reserves of all but the biggest farmers.

Meaning of Capital reserve & Capital reserve Definition