Meaning & use
revenue reserve
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Meanings
nouncountablebusinessfinanceBritish
money a company keeps from its profits instead of paying it out to owners, shown in its accounts as part of shareholders' funds.
Grammar: Countable: you can talk about a revenue reserve or several revenue reserves.
Patterns
- build up a revenue reserve
- hold something in revenue reserve
- a revenue reserve of an amount
The firm built up a revenue reserve of £2 million over five years.
After paying a modest dividend, the board decided to add the remaining profit to the revenue reserve.
Analysts looked at the revenue reserve to judge how much cash the company could safely retain.
nouncountablebusinessfinanceBritish
the part of a company's accounts that records profits kept in the business rather than distributed.
Grammar: Often used with the: the revenue reserve appears on the balance sheet.
Patterns
- show something in the revenue reserve
- the revenue reserve on the balance sheet
The revenue reserve on the balance sheet had grown steadily since the company was founded.
Auditors checked that the transfer to the revenue reserve had been approved by the directors.
A large revenue reserve can make a company look financially stronger than its current trading suggests.
Word forms
| plural | revenue reserves |
|---|
Common combinations
- build up a revenue reserve
- The family business slowly built up a revenue reserve to fund future expansion.
- transfer profits to the revenue reserve
- At the year end, the accountant transferred profits to the revenue reserve.
- draw down the revenue reserve
- In a bad year, the company had to draw down the revenue reserve to cover losses.
- a healthy revenue reserve
- A healthy revenue reserve gave the directors confidence to invest in new equipment.
- the revenue reserve account
- The revenue reserve account showed a balance of £500,000.
Synonyms and how they differ
- retained earnings
- The usual American term for profits kept in the business; revenue reserve is the British equivalent in many company accounts.
- retained profits
- A more general British phrase for profits not paid out; it can refer to the same idea but is less formal than revenue reserve.
Commonly confused: revenue reserve or capital reserve? revenue reserve or revenue?
revenue reserve vs capital reserve
A capital reserve comes from non-trading sources such as selling assets, while a revenue reserve comes from normal trading profits.
revenue reserve vs revenue
Revenue is the total income from sales; a revenue reserve is a part of that income kept in the company.
Practice
Which sentence uses 'revenue reserve' correctly?
Choose one answer.
A revenue reserve is money kept from profits, so adding to it strengthens the balance sheet. Option 1 describes the opposite (no reserve), option 2 wrongly treats it as a cost, and option 4 confuses it with liabilities.
Make it your own
Write a sentence using “revenue reserve”, then check it and compare it with the examples above.