Which Statement Relating to Reserves Is Incorrect

question 35

Multiple Choice

Which statement relating to reserves is incorrect?

• A) They represent cash set aside to be drawn on in hard times.
• B) They represent items of equity other than share capital.
• C) Retained earnings is a type of reserve account.
• D) When a non-current asset is revalued upwards a revaluation reserve is created.

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Definitions:

FIFO Method

Stands for "First-In, First-Out," a method of inventory valuation where the first items purchased are the first ones sold.

Job Order Cost Accounting

A system used to assign manufacturing costs to an individual product or batches of products, typically in customized or non-repetitive manufacturing environments.

T Accounts

A visual representation used in accounting to depict the debit and credit sides of an account.

Manufacturing Overhead

All indirect costs related to the manufacturing process, including but not limited to, rent, utilities, and salaries of non-direct labor.