Do you think principle of conservation results in creation of secret reserves
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Answer:
Yes because it neither be created nor be destroyed
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The principle of conservation results in creation of secret reserves is a false statement.
Explanation:
- The principle of conservation does not result in creation of secret reserves. It is a reserve that is not shown in the financial statements of a company.
- These reserves are usually maintained by banks or official financial institutions and are known to the management.
- These reserves help in making the financial position stronger; it provides the shareholders the confidence of stability of their dividend.
- It also provides a good amount of satisfaction to the creditors.
- These reserves usually make people doubt and question the financial statement’s authenticity and make them think that the information provided is false.
TO KNOW MORE:
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