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Capital Reduction A/c balance after writing off losses and fictitious assets is usually transferred to:
AP&L A/c
BGeneral Reserve
CCapital Reserve
DBank A/c
Answer & Solution
Correct answer: C. Capital Reserve
1. Step 1: After writing off all losses/intangibles, any surplus in Capital Reduction A/c is transferred to Capital Reserve.
2. Step 2: This represents capital savings that are not freely distributable.
3. Step 3: Hence (B).
_Source: ICAI BoS CA Inter Paper 1, Ch 14 "Internal Reconstruction"_