Secret Reserves Are Designed to Conceal the True Financial Position

Secret reserves are designed to conceal the true financial position and earnings, which are different than shown on the balance sheet and income statement. The best statement of how secret reserves are related to fraud and ethics is:

A) Secret reserves often lead to smoothing net income over time.
B) Secret reserves make the information in financial statements inconsistent.
C) Secret reserves are legal and normal operating practices in all countries around the world.
D) Secret reserves can give the sense of financial security to the shareholders and regulators.