Capital and Reserves is a line item under the Equity section of the Balance Sheet.
Capital is the initial investment made by the shareholders of the company by means of cash, equipment or property.
Reserves, also known as accumulated profits or retained earnings, is the profit left over after all expenses and taxes have been paid and dividends have been distributed to the shareholders.
In summary, it is the accumulated profits that the company has 'saved' each year, which has not been paid out to shareholders.
