Reserve creation
This query is : Resolved
CA RICHA BADALIA
(Expert)
20 October 2011
A secret reserve is created by the following methods:
1. By under valuation of assets
2. By creating excessive reserve for bad and doubtful debts or discount on sundry debtors.
3. By providing, excessive depreciation on fixed assets.
4. By writing down goodwill to a nominal value.
5. By omitting some of the assets altogether from balance sheet.
6. By changing capital expenditure to revenue account and thus showing the value of assets to be less than their
actual value.
7. By overvaluing the liabilities.
8. By the inclusion of fictitious liabilities.
9. By showing contingent liabilities as actual liabilities.
1. By under valuation of assets
2. By creating excessive reserve for bad and doubtful debts or discount on sundry debtors.
3. By providing, excessive depreciation on fixed assets.
4. By writing down goodwill to a nominal value.
5. By omitting some of the assets altogether from balance sheet.
6. By changing capital expenditure to revenue account and thus showing the value of assets to be less than their
actual value.
7. By overvaluing the liabilities.
8. By the inclusion of fictitious liabilities.
9. By showing contingent liabilities as actual liabilities.
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CA RICHA BADALIA
(Expert)
20 October 2011
Please clarify what you want to know.
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Ashok Mehta
(Expert)
21 October 2011
It does not appear in the balance sheet; hence the name secret reserve.
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