CAF-1 · Chapter 8 · Question 11 of 15
In the statement of changes in equity, what is the effect of transferring Rs. 20 million from retained earnings to a general reserve?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Retained earnings decrease and general reserves increase, with no change to total equity.
Explanation
Transfers between reserves (such as from retained earnings to general reserves) are internal reclassifications within equity and do not change the total equity balance.
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