Checked the company setting but could not find a place to configure an account as Reserve Profit and Loss. This was tried on version 7.0 on the demo site of http://openerp.com. Please share where the setting is.

Thanks for your reply Mustufa, however i am still unable to find the settings for this. Would appreciate if you can elaborate on where exactly can this setting be found?

Ok, Reserve and surplus account setting available on OpenERP 6.0 version on company settings but in 7.0 that setting was removed and the feature has been replaced by Financial Report Invoicing/Configuration/Financial Report/Account Report.. Here you can configure that account with report type value with profit and loss report...