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Reserves and Surplus refer to the portion of a company's profits that are set aside for specific purposes, rather than being distributed as dividends to shareholders. These funds are created to strengthen the financial position of the company, to meet future contingencies, and to reinvest in the business. They are part of shareholders’ equity on the balance sheet and can be classified into two main categories: Reserves and Surplus.

### Reserves
Reserves are the funds that a company sets aside for a particular purpose, and they are usually not available for distribution as dividends. They may be created for specific or general needs. A company can create a reserve by appropriating a portion of its profit. There are different types of reserves:

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