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Difference between Provision & Reserve?
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Provision is charged to p/l a/c where as reserve is an
appropriation of profit.
Provision is must charged to p/l a/c before calculating
the net profit or loss, but reserve can made only when there
is profit.
Provision is created for specific object, reserve is
created for probable losses.
Provision reduces the net profit and are not invested
in outside securities. Reserves reduces divisible profit can
be invested in outside securities.
| Is This Answer Correct ? | 270 Yes | 16 No |
The money which is kept aside for a known event is said to
be PROVISION
The money which is kept aside for unknown event is said to
be RESERVE
| Is This Answer Correct ? | 135 Yes | 33 No |
Answer / kiran
provision is charged in p&l a/c, it is for upcoming liability
for example : income tax
reserve: which is kept a side for un known events wheather
it is future losses/new installations etc.
| Is This Answer Correct ? | 63 Yes | 17 No |
Answer / harish
provision is a charge to the profit whilst a reserve is an appropriation to the profit. Reserves belongs to the owners equity side while provision can be on a liability side or on the assets side but as a negative asset
| Is This Answer Correct ? | 29 Yes | 7 No |
Answer / hemanshu
Provison is purely related with P & L, which we can called
upcoming liablities. and its sure to paid.
Reserve is not sure to paid or any consideartin but it like
a protecter for any uncertainity of any Exp.
| Is This Answer Correct ? | 15 Yes | 7 No |
Answer / suraj somani
Reserves are created when there are profit.
But provisions are to be created even when there are losses..
| Is This Answer Correct ? | 7 Yes | 1 No |
Answer / sandhia
Provision is a charge on profit where as reserve is an appropriation of profit.
Provision is created on known liability where as reserve is created on unknown liability.
Provision is created even if there is no profit where as reserve is created when there is enough profit.
| Is This Answer Correct ? | 6 Yes | 1 No |
Answer / nishanth loyal
Provision is considered as an expense. so that the amount is
entered in the P&L a/c.It is allotted for the specific
purposes. Then only we are going to know Profit or loss.
After finding that the company is earning profit we are
going to allot the reserve out of profit for general purpose.
Both the amount is for precautionary purpose. But the former
one is considered as expense and latter is considered as
liability.
| Is This Answer Correct ? | 2 Yes | 1 No |
Answer / akhil gupta
Reserve is created against the charge of the profit and loss appropriation account. Provision is created against the charge of the profit and loss account.
Main objective of reserve is to strengthen the financial position and to meet future unknown losses and liabilities. Objective of provision is to meet known losses and liabilities the amount of which is not certain.
Reserve is created when there is enough profit in the business. Provision is created even if there is loss in the business.
| Is This Answer Correct ? | 4 Yes | 5 No |
Answer / pun
Why not we must to creatd Provision & Reserve?
And if we're not recognized what the effect will be?
| Is This Answer Correct ? | 13 Yes | 16 No |
AT THE TIME OF REDEMPTION OF DEBENTURES. WHEN THERE IS PROFIT/LOSS ON SALE OF DEBENTURES WE TRANSFER THAT AMOUNT IN PROFIT AND LOSS A/C BUT WHEN WE CANCEL OUR DEBENTURES AFTER BUYING IT FROM OPEN MARKET THE DIFFERENCE BETWEEN MARKET VALUE AND COST OF DEBENTURES TRANSFER TO "CAPITAL RESERVE ACCOUNT .. WHY SO ANY PRACTICAL ANSWER ??
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