A "Secret" or "Hidden" Reserve Can Occur When a Company

question 6

Multiple Choice

A "secret" or "hidden" reserve can occur when a company does one or more of the following except for:

• A)Fails to recognize an asset in its balance sheet
• B)Deliberately measures an asset at an unreasonably low value
• C)Sets up unnecessarily high provisions
• D)Sets up unnecessarily low provisions

---

Definitions:

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the face value of interest payments.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the true yield on savings.

Monetary Neutrality

The idea that changes in the money supply only affect nominal variables (like prices) in the long run and have no effect on real variables (like output or employment).

Money Supply

The combined total of all monetary resources in an economy at a designated time, including cash, coins, and balances in checking and savings accounts.