What are secret reserves? Theory base of accounting class 11

Dear student
secret reserves are created by company to hide its true financial position. these reserves are not shown in the balance sheet. It is created by showing the wrong value of asset and liabilities. such that its show the decrease(less value of the assets) or by showing the high value of liabilities. This is could be done by a company for many reasons tax evasion is one of them.
Regards

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