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.

Question

Quizplus · Accepted Answer

Reserves in the equity section are often created by transferring amounts from retained profits, reflecting a reallocation within equity rather than an addition of new funds.

Reserves Recorded in the Equity Section of the Statement of Financial