The statement concerning the reserves component of equity that is not correct is:
A) Reserves represent cash.
B) The higher the dividend paid by the company, the lower the reserves.
C) Retained earnings and reserves are often classified under the general heading of reserves.
D) Many reserves arise as transfers from retained earnings.

Question

Quizplus · Accepted Answer

Reserves do not always represent cash. Reserves can represent other forms of assets or equity, such as property or retained earnings.

The Statement Concerning the Reserves Component of Equity That Is