Distinguish between revenue reserve and capital reserve.

Basis of Difference

Revenue Reserve

Capital Reserve

Source

It is created out of revenue profit, i.e., revenue earned from normal activities of business operations.

It is created out of capital profit, i.e., gain from other than normal activities of business operations, such as sale of fixed assets, etc.

Dividend

It can be used for dividend.

It cannot be used for dividend.

Purpose

It is created for strengthening the financial position of the business.

It is created for the purpose laid down in the Companies Act.