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Why might a company create secret reserves?
  • a)
    To reduce its tax liability
  • b)
    To show higher profits to shareholders
  • c)
    To strengthen its financial position
  • d)
    To fund expansion projects
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Why might a company create secret reserves?a)To reduce its tax liabili...
Companies, particularly those needing public confidence, might create secret reserves by undervaluing assets or creating excessive provisions. This allows them to show higher profits to shareholders while maintaining hidden financial strength.
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Why might a company create secret reserves?a)To reduce its tax liabilityb)To show higher profits to shareholdersc)To strengthen its financial positiond)To fund expansion projectsCorrect answer is option 'B'. Can you explain this answer?
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