Secret reserves may not result by:

Premium on issue of shares is the amount received by a company in excess of the face value of its shares. This amount is usually credited to a share premium account, which is a reserve that is not available for distribution to shareholders.

Dividend equalization reserve is a reserve that is created to smooth out fluctuations in dividends. A company may create this reserve in good years and use it to pay dividends in bad years.

Reserve created out of profit on the sale of Fixed Assets is a reserve that is created when a company sells a fixed asset for more than its book value. This amount is usually credited to a revaluation reserve, which is a reserve that is available for distribution to shareholders.

Profits prior to incorporation are profits that were earned by a company before it was incorporated. These profits are not included in the company’s financial statements because they were earned by a different legal entity.

Therefore, the only option that is not a source of secret reserves is profits prior to incorporation.