Which of the Following Statements Is True Regarding Equity Reserves

question 1

Multiple Choice

Which of the following statements is true regarding equity reserves?

• A) Under U.S.GAAP,Other Comprehensive Income represents an equity reserve.
• B) Under U.S.GAAP,the allowance for doubtful accounts is considered an equity reserve.
• C) Under U.S.GAAP,appropriations of retained earnings are considered an equity reserve.
• D) Under U.S.GAAP,equity reserves are not currently allowed.

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Definitions:

Negotiable Instrument

A legal document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payer named on the document.

Security Interest

A legal claim or lien on collateral (property or assets) granted to secure the performance of an obligation, usually repayment of a debt.

Bank

A financial institution licensed to receive deposits, offer loans, and provide other financial services to individuals and businesses.

Negotiable

Capable of being transferred or assigned to another party in return for value received; often used in reference to financial instruments.