what is provision what is the difference between provision
& reserve
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provision:provision usually means any amount written off or
retained by the way of providing depreciation, renewals or
diminutions in the value of assets or retained by way of
providing for any known liability of which the amount can
not be determined with substantial accuracy.
reserves: that portion of current earnings set aside to
take care of possible future losses or for other specified
purpose.
difference:provision is charge against profits while
reserves is an appropriate of profits.
creation of reserves increase proprietor's fund while
creation of provisions decrease his funds in the business.
| Is This Answer Correct ? | 9 Yes | 2 No |
Provisions means some expenses incured at the time closing
the account but payment not yet paid /the amount to be held
ith us that belongs to others
| Is This Answer Correct ? | 2 Yes | 1 No |
Answer / sandeep
Provision will be made for known liability or loss (its not the actual a/m of loss or liability)
Reserve will be made for unknown liability which is upcoming.
(not actual assumed portion)
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