Accountancy/Capital and Reserves

Capital is an investment of money invested by the owners of a business with the intention of earning a return. Accounting usually treats the capital as money owned by the owners of the business, or money owed to the owners. Reserves are funds set aside and may be specifically for a certain purpose or may be a general surplus funds. Various reserves such as Share Premium Reserves, Unappropriated Profit Reserves, etc. These reserves are usually created as excess funds and not to meet a liability (as in a provision).