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Increase in Reserves

  • Thread starter Johnson Adeleke
  • Start date
J

Johnson Adeleke

Member
What is the increase in reserves and why is it a form of outgo?
 
For example you had reserve of $1000 in previous year now your
required reserve is $1200 and interest rate is 10%
so 10% of 1000 is 100
that means 1000+100 = 1100
so net increase in reserve is 1200-1100 = 100
so now company will have to make the reserve of $100 more so that is why this $100 is an outgo
 
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