Question

Secret Reserve is created by: Secret Reserve is created by:

• A. Writing off excessive depreciation
• B. Charging capital expenditure to Profit & Loss Account
• C. Suppressing the sales
• D. All of the above

Answer 1

Answer:

D. All of the above

Secret Reserve: A reserve not shown in the balance sheet to hide the true profits of a company. It can be created by: Writing off excessive depreciation – reduces profit artificially. Charging capital expenditure to P&L – treated as an expense, reducing profits. Suppressing sales – not recording full income, reducing apparent profit. Purpose: Provides hidden financial strength or cushion against future losses.