Question

that
51. Companies may intentionally understate earnings when income is high to create
may be used in future years to increase earnings.
(a) Statutory reserves
(b) Secret reserves
(c) Cash
(d) Sales​

Answer 1

Answer:

Companies may intentionally understate earnings when income is high to create a reserve of "earnings" that may be used in future years to increase earnings. This practice is known as :earning management

Answer 2

Answer:

Secret reserve's

Explanation:

SECRET RESERVES :-

"A reserve which is not visible on the balance sheet is called secret reserves."

It is a surplus concealed. In case of a secret reserve existence the actual financial position of the business is better than shown in the balance sheet. In case of bank, insurance companies and financial institutions secret reserves are justified.