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.

---

Definitions:

Interest Rate

The percentage of an amount of money charged for its use, indicating the cost of borrowing money or the return on invested savings.

Savings Exceeds Investment

A situation in which the amount saved by households or organisations is greater than the amount being invested within the economy.

Recession

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in GDP, real income, employment, industrial production, and wholesale-retail sales.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal, over a specific period.