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

Accounts - Principles of Accounts
WAEC 2018

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

  • A. position
  • B. reserve
  • C. depreciation
  • D. surplus
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Correct Answer: Option B
Explanation

A reserve is profits that have been appropriated for a particular purpose. Reserves are sometimes set up to purchase fixed assets, pay an expected legal settlement, pay bonuses, pay off debt, pay for repairs and maintenance, and so forth.


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WAEC offline past questions - with all answers and explanations in one app - Download for free
Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
WAEC May/June 2024 - Practice for Objective & Theory - From 1988 till date, download app now - 99995
WAEC Past Questions, Objective & Theory, Study 100% offline, Download app now - 24709
WAEC offline past questions - with all answers and explanations in one app - Download for free
WAEC Past Questions, Objective & Theory, Study 100% offline, Download app now - 24709
WAEC May/June 2024 - Practice for Objective & Theory - From 1988 till date, download app now - 99995
Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts