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WAEC Financial Accounting 2018 Question 25

Question 25

Company Accounts

The amount set aside out of profits to strengthen the financial position of the business is

  1. A.provision.
  2. B.reserve.
  3. C.depreciation.
  4. D.surplus.
Show the answer and explanation

Answer: B (reserve.)

Explanation

Profit retained for strengthening the business is a reserve.