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WAEC Financial Accounting 2000 Question 49

Question 49

Company Accounts

A reserve is an amount

  1. A.to be paid to creditors
  2. B.set out of profit for future use
  3. C.for paying dividends
  4. D.recovered from debts earlier written off.
Show the answer and explanation

Answer: B (set out of profit for future use)

Explanation

A reserve is profit kept back (appropriated) for future use.