Reserves Recorded in the Equity Section of the Statement of Financial

question 13

Multiple Choice

Reserves recorded in the equity section of the statement of financial position:

• A) represent an amount of cash put aside for future projects.
• B) are created from excess profits that are not available for distribution as dividends.
• C) may be established by transferring amounts from retained profits.
• D) will not have an impact on the total equity reported in the equity section of the statement of financial position when created.

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Definitions:

Current Ratio

A metric assessing a business's ability to handle its due within one-year obligations, obtained by the ratio of current assets to current liabilities.

Performance Comparison

The process of comparing the actual performance of an individual, group, or process against set standards or expectations.

Accounting Statements

Financial documents that provide an overview of a company's financial condition, including income statement, balance sheet, and cash flow statement.

Ratios

Quantitative measures used to assess the financial performance, liquidity, efficiency, or risk of a business entity.