RESERVE

(1) Segregation of retained earnings to provide for payouts such as dividends; contingencies, improvements, or retirement of preferred stock; (2) valuation reserve for depreciation, bad debt losses, shrinkage of receivable because of discounts taken, and other provisions created by charges to the profit and loss statement; (3) hidden reserves, represented by understatements of balance sheet values; (4) cash on hand and deposit maintained by a commercial bank in a Federal Reserve Bank to meet the federal reserve requirements; and (5) gold and foreign currency held by governments to pay for imports and foreign debts.