QUOTE: What Are Balance Sheet Reserves? Balance sheet reserves, also known as claims reserves, are accounting entries that show money set aside to pay future obligations. Balance sheet reserves appear as liabilities on a company's balance sheet, one of the three main financial statements.

No company earns a profit until everything is taken care of. That includes future capital expenditure, a 'reserves' section for salaries to be paid in the future if te company does not make enough. This is not profit.

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