What is the difference between savings and savings accounts in accounting?

What is the difference between savings and savings accounts in accounting?

Reserves (for example, legal reserve) is an amount from a specific source (such as a proportion of the capital) that must be kept in a separate account before the distribution of profits to prevent this amount from leaving the company’s asset cycle. Also, the due date There is no definite date for its release, and according to the law or the decision of the company’s shareholders, it has a certain ceiling. To create a reserve, there must be an existing profit, but such a requirement is not necessary to create a reserve.

Also, the legal reserve is considered to be 5% of the current year’s profit every year, and this practice is mandatory until the legal reserve reaches 10% of the company’s capital, and more than 10% is optional.

However, the reserve is a reservoir of the realized costs that have not been paid and does not have a specific ceiling, and the decision of the company’s shareholders is not involved in determining its amount. In fact, reserve refers to past expenses, but reserve has nothing to do with expenses in the past. In some old books, hoarded, hoarded, and hoarded were used in the same sense.

The terms stored and stored are used interchangeably in many cases. However, their usage cases can be separated as follows:

1. The term stored is used in the following cases:
Allocation and limitation in retained earnings are generally based on the proposal of the board of directors and approval of the general assembly, or in compliance with the provisions of contracts or legal requirements, and one of the reporting methods of allocation and limitation in retained earnings is to show it separately in the balance sheet. Allocation and limitation in the accumulated profit is called reserve. Such as: legal reserve, precautionary reserve (general), discretionary reserve (contractual) and so on

2⃣ The term storage is usually used in the following cases:
A- For asset accounts, such accounts show the identified decrease in the cost price of some asset items and cause the said assets to be reflected in the net recoverable value. Such as: reserve for doubtful accounts, reserve for depreciation of inventories and investments. .

Note: Although accumulated depreciation is also a type of asset account, due to the difference in the type of decrease in tangible fixed assets (depreciation is not considered a decrease in the value of tangible fixed assets), the term reserve is not used in this regard.

B- For debts whose settlement time or determination of their amount is relatively significant, such as: reserve for end of service benefits, reserve for income tax, reserve for goods guarantee and

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This post is written by mda140