Revenue reserves are created from revenue profits arising out of the normal operating activities of the business and are available for dividend distribution. Four examples are:

1. General reserve
2. Workmen compensation fund
3. Investment fluctuation fund
4. Dividend equalisation reserve

Capital reserves are created out of capital profits which do not arise from the normal operating activities and are not available for distribution as dividend. Four examples are:

1. Premium on issue of shares or debenture
2. Profit on sale of fixed assets
3. Profit on revaluation of fixed asset & liabilities
4. Profits prior to incorporation