The use of the term reserve in the title of a financial statement account is not acceptable in the United States, primarily because its purpose is often too vague. However, informal use of the term by chief financial officers, analysts, and the media is common when they are discussing various aspects of acceptable accrual accounting techniques employed by U.S. firms. Provide several examples of financial statement accounts that are often loosely referred to as reserves. What is typically common about all financial statement accounts that are informally referred to as reserves?© BrainMass Inc. brainmass.com October 17, 2018, 4:30 am ad1c9bdddf
All account informally referred to as "reserves" are set up based on estimates. This means that the amounts will not be known for sure until future periods. For example, the allowance for uncollectible accounts. This is an account to reduce accounts receivable down to the net realizable value, the amount that will ultimately be collected in cash. The estimate must be made when the sale occurs, which is ...
Your discussion is 275 words (about a page) and is in everyday language suitable for a novice. Examples are given (uncollectible accounts, warranty reserves, clean up reserves).
Fair Value Accounting and the Global Financial Crisis 2007
The recent financial crisis has turned the spotlight on fair-value accounting (FVA) and led to a major policy debate involving among others the US Congress, the European Commission as well as banking and accounting regulators around the world. Critics argue that FVA, often also called mark-to-market accounting (MTM), has significantly contributed to the financial crisis and exacerbated its severity for financial institutions in the US and around the worldView Full Posting Details