Which of the following statements about the general reserve account is NOT true?
A) A transfer to this account may be used to indicate to shareholders that it is unlikely to be paid out in dividends.
B) Amounts can be transferred back from it to retained profits.
C) The general reserve account provides an indication of where funds are invested.
D) The general reserve account appears under shareholders' equity in the balance sheet.

Question

Quizplus · Accepted Answer

The general reserve account does not provide an indication of where funds are invested. Its purpose is to record a portion of profits that has been retained for unspecified future uses, such as investment in new technology, expansion of operations or paying off debt.

Which of the Following Statements About the General Reserve Account