what is the difference between PROVISION & RESERVE ?
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Answer / guest
PROVISION : Provision is a charge to P&L a/c.
RESERVE : Reserve is an appropriation of profit.
provision : it is because of legal necessity.
reserve : it is a matter of finavial prudence.
provision : creation of provision decreases the funds of
the business.
reserve : creation of reserve increases the working capital
of the business.
provision : can be made irrespective of profit / loss
reserve : cannot be made when there is loss.
provision : are made against expected losses.
reserve :safe guard against unexpected losses and there by
to strengthen the financial position of the company
Is This Answer Correct ? | 94 Yes | 6 No |
Answer / ankit
provision is generally concerned about future contingency
while reserve is about to save some money from profits......
Is This Answer Correct ? | 37 Yes | 8 No |
Answer / sri
Provision is for a known future contingency
Reserve is for an unknown future contingency
Is This Answer Correct ? | 25 Yes | 4 No |
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