Problem:
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?