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“Reserve” is sometimes used to refer to a negative
asset account on the balance sheet that is *offset* against loan portfolio, but International Accounting Standards uses this term exclusively for equity-account items, such as appropriations of retained earnings or capital maintenance adjustments.
2007-02-09 18:45:52 · 3 answers · asked by Ron 1 in Education & Reference ➔ Words & Wordplay
As far as I know, the term "offset" in accounting means to balance by an equivalent amount, i.e. to counterbalance.
2007-02-09 18:56:14 · answer #1 · answered by Fairy 7 · 0⤊ 0⤋
Some amounts are set apart from profits for likely unrealizable loans, as a form of prudent accounting policy, by companies. These appear on the liabilities side of the balance sheet.
If necessary, the amount shown separately for such bad debts is reduced from the outstanding debts (loans made) so as to show the correct picture of realizable loans. This practice is called offset, meaning thereby that the balance in one account head is to be reduced by a reserve made for that account head on the other side of the balance sheet.
2007-02-10 07:13:49 · answer #2 · answered by greenhorn 7 · 0⤊ 0⤋
opposed to..it's the like two sides of an account.u have a passive and an active side.loans r passive, a debt, reserve is active.offset* means opposed.or that's how i c it.(just gave my accountancy exam)
2007-02-10 02:50:40 · answer #3 · answered by krissa 2 · 0⤊ 0⤋