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what is the difference between provision for bad debts and
reserve for bad debts?
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Answer / rohit jain
prov for doubtful debt is crwated for the known bad debt
but reserve for doubt debt is created for the future bad
debt ir any occurs.
prov is charge against profit but reserve is appropriation
of profit.
| Is This Answer Correct ? | 65 Yes | 18 No |
Answer / sonali
Entry for Provision for debts comes in P& L a/c.
Entry of reserves for bad debts is on liability side in
balancesheet under reserves.
The reserves for bad debts for the F.Y. 07-08 will be the
provision for bad debts for the F.Y. 08-09.
| Is This Answer Correct ? | 65 Yes | 34 No |
Answer / amit kapoor
Reserves
1. It is created by debiting the profit and loss
appropriation account.
2. It is created to meet an unknown liability, or to
strengthen the financial position of the company or for
equalization of dividends etc.
3. A reserve is created only when there is profit in the
business.
4. It can be distributed among shareholders as dividend.
5. The reserve is created without taking into consideration
the actual amount required except in the case of redemption
of debentures when a definite sum is set aside.
6. Creation of reserve depends upon the financial policy of
the business and discretion of its management.
7. It is usually shown on the liability side of the balance
sheet as it is not a specific reserve.
Provisions
1. It is created by debiting the profit and loss account.
2. It is created to meet a known liability or a specific
contingency, e.g.. provision for bad and doubtful debts, or
provision for depreciation etc.
3. A provision is created irrespective of whether there is
profit or loss in the business.
4. It is not available for distribution as dividend among
shareholders.
5. A provision is made for a definite amount and,
therefore, a definite sum is set aside every year to meet
the known contingency.
6. Making of a provision is a must to meet known liability
or contingency.
7. The provision is generally shown on the assets side of
the balance sheet.
| Is This Answer Correct ? | 31 Yes | 7 No |
Answer / raghava kumar .i
provision means to kept aside of amount for the expected
losses.and reserve is to kept the amount aside to specific
purpose.when provision is reserved for bad debts or reserve
is created for bad debts is same for confussion they asked
like.provision for bad debts entry is .
profit and loss a/c ------------dr
to provision for baddebts a/c
(beeing provision created for baddebts.)
| Is This Answer Correct ? | 17 Yes | 6 No |
Answer / chandu
provision for bad debts means the amount kept a side for future known bad debts.
this amount is debited to profit and loss a/c,
where as reserve for bad debts means the amount kept a side for future unknown bad debts.
reserve for debts the amount debited to profit and loss aprapriation a/c.
| Is This Answer Correct ? | 8 Yes | 3 No |
Answer / sanjog bajaj
ALWAYS GIVE SIMPLE ANSWERS.
PROVISIONS-ARE KEPT A SIDE TO MEET ANY CONTINGENCY IN FUTURE.
RESERVES-ARE A PROFIT CALLED UP AT THE TIME OF LIQUIDATIONS
IF ASSETS HELD ARE NOT SUFFICIENT TO MEET THE LIABILITIES.
| Is This Answer Correct ? | 6 Yes | 5 No |
Answer / auspice a budu
provisions are amounts set aside for a specific purpose, eg.
provision for depreciation or bad debt whiles reserves are
amount set aside but not for a specific purpose.
| Is This Answer Correct ? | 1 Yes | 2 No |
Answer / suryanarayana rao
provision ofr bad debts is created for the current year and
it is added to bad debts and reserve for doubtful debts is
deducted from bad debts because it is maintained for in
last year.
| Is This Answer Correct ? | 5 Yes | 7 No |
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