Quick Answer: What Is Secret Reserve?

What is hidden reserve?

Value that a person or company possesses that does not appear on its balance sheet.

One may have a hidden asset due to an accounting convention.

For example, a company may be required to depreciate an asset faster than its actual value declines.

A hidden asset is also called a hidden reserve or a hidden value..

Are secret reserves shown in the balance sheet?

Secret reserves are also called Hidden Reserve or Internal Reserve. Such a reserve is not disclosed on the Balance Sheet. It can be said that there is a surplus of assets over liabilities and that surplus is not disclosed or shown by the Balance Sheet.

What is reserve fund?

A reserve fund is a savings account or other highly liquid asset set aside by an individual or business to meet any future costs or financial obligations, especially those arising unexpectedly. If the fund is set up to meet the costs of scheduled upgrades, less liquid assets may be used.

What disclosed reserves?

: ¤ Disclosed reserves are reserves about which a company gives details and information. An example of a disclosed reserve would be the share. premium reserve which appears on balance sheets. Disclosed reserves are included as part of Tier 1 capital under the Basle Capital Accord.

What are Revaluation reserves?

Revaluation reserve is an accounting term used when a company creates a line item on its balance sheet for the purpose of maintaining a reserve account tied to certain assets. … Revaluation reserves are most often used when an asset’s market value greatly fluctuates or is volatile due to currency relationships.

Can reserves be negative?

Negative Reserves means Accumulated Losses of the Business. … Basically Reserves are created out of profits of thd Co and forms part of networth together with the Equity Capital of the unit and is part of liabilities of the business . But losses accumulated become negative Reserves and will erode the networth of the Co.

What is secret reserve how it is created?

Secret reserve is also known as internal reserve. It is created by showing the figure of net profit less than actual. Its existence makes the financial position of the business better than what the balance sheet is disclosing. Generally, it is maintained by bank, Insurance and other financial institutions.

What are the 3 types of reserves?

There are different types of reserves used in financial accounting like capital reserves, revenue reserves, statutory reserves, realized reserves, unrealized reserves.

What are secret reserve what are their merits and demerits?

* Secret reserve gives the sense of financial stability to the shareholders and creditors by equalizing the rate of dividend. * Secret reserve helps in eliminating unhealthy competition by not showing true profit to the competitors. * Secret reserve provides additional working capital.

What is General Reserve?

A general reserve is a reserve, which is created by appropriation of profits. It is created without any specific or particular purpose.

What are loan loss reserves?

Loan loss reserves are accounting entries banks make to cover estimated losses on loans due to defaults and nonpayment.

Is general reserve an asset?

A general reserve is a capital or a equity account. It is reported on the balance sheet under the liabilities in the right sided section of the balance sheet. Look at a sample balance sheet. The assets are on the left side and liabilities and capital are on the right side.

Are reserves current liabilities?

Share Capital, Debentures, Long-term Loans, Bank Loans, Public Deposits, Profit and Loss Account (Cr.). Other Non-Current Liabilities: General Reserve, Capital Reserve, Securities Premium, Forfeited Share Account, Dividend Equalization Fund, Sinking Fund, etc.