Difference between Provisions and reserves
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Answer Posted / loknath behera
Provisions :-
1.Created by debiting P/L account .
2.Created to meet the known liability or a specific contingency
3.Not available for dividends .
4.It is shown in the asset side of balance sheet .
Reserves :-
1. It is created by debiting P/L Appropriation account .
2. Created to meet unknown liabilities .
3. Created when there is profit in business .
4.It can be distributed among shareholders and dividend .
5.Liability side of balance sheet .
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