Answer / keerthi d&

Provisision is nothing but,keeping aside out of profits to
bear the uncertain losses in the future.. so provisions
are made to set off the losses of a company or a business
concern which will occur in the future period..
different types of provisions are:-
1.provision for depriciation (on plant & machinary, land &
buildings, accessories, etc..)
2.provision for bad debts (on debtors,bills recievables,
etc..)
3.provision for uncertain losses(fire, theft. spoilage
etc..)

Answer / ammu

provision are made because they are payable in future not
or next accounting year.

JOURNAL ENTRY

company pay gratuity and each year an entry is pass for the
same which is called Provision for gratuity

so entry will be

Gratuity A/c dr
Provision for Gratuity a/c

this is a provision entry ( above )

Profit & loss a/c DR
Gratuity A/c

Answer / sajjad1

When Provosion is Made then Pass This Entry

Gratuity Fund (Dr)
Provision for Grauity Fund (Cr)
When Its Occur

Provision for Grauiyy Fund (Dr)
Bank/Casg (cr)

Answer / acca

AS per IAS 37 , provision is a liability with the uncertain amount and timing. 

recognized provision as Liability when these condition meet.

1)Present obligation: under which consider two obligation legal obligation and constructive obligation.

 2) Past event 

 3) future outflow of cash is probable 

 4) the amount of provision can be measure reliably at the time of book provision.

As per IAS 37 can be recognized certain things as provision. 

Doubtull debt 
depreciation

in the case of gratuity:at the time of occurs 

Dr: Gratuity Exp a/c
Cr: provision for gratuity a/c 


provision of liability should be account in the statement of financial position at the present value if its beyond more than one year.  

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