The correct answer is: A. Reserve
A reserve is an amount of money set aside by a company for a specific purpose. Reserves can be used to cover unexpected expenses, to invest in new projects, or to pay dividends to shareholders.
There are two main types of reserves: capital reserves and revenue reserves. Capital reserves are created from the proceeds of a company’s share capital, while revenue reserves are created from the profits of a company’s operations.
Capital reserves are used to protect the interests of shareholders. They can be used to repay debt, to make acquisitions, or to pay dividends. Revenue reserves are used to smooth out earnings and to provide a buffer against unexpected expenses.
Reserves are an important part of a company’s financial statements. They provide information about the company’s financial strength and its ability to meet its obligations.
Here is a brief explanation of each option:
- A. Reserve: A reserve is an amount of money set aside by a company for a specific purpose. Reserves can be used to cover unexpected expenses, to invest in new projects, or to pay dividends to shareholders.
- B. Fund: A fund is a pool of money that is set aside for a specific purpose. Funds can be used to finance research, to provide scholarships, or to support charitable causes.
- C. Capital Reserve: A capital reserve is a type of reserve that is created from the proceeds of a company’s share capital. Capital reserves are used to protect the interests of shareholders and can be used to repay debt, to make acquisitions, or to pay dividends.
- D. Secret Reserve: A secret reserve is a type of reserve that is not disclosed in a company’s financial statements. Secret reserves are typically used to smooth out earnings or to provide a buffer against unexpected expenses.