what is the distinction between provisions and reserves

Answers were Sorted based on User's Feedback



what is the distinction between provisions and reserves..

Answer / bindu

Provision is created to meet known liabilities. So that it
will be debited to P&L A/c where as credit will be hitted
to Assets side of the Balance Sheet (reduced from specific
asset for which it has been created.) Provision needs to be
created in case of losses also and this provision is not
used for distribution as dividends among share holders.

Reserve is created for un known liabilities. and it will be
debited to P&L appropriation account and credited to
liability account in balance sheet.Reserve can be created
in case of profits only.And this amount can be used for
distribution as dividend (Unless specific reserves).

Is This Answer Correct ?    5 Yes 1 No

what is the distinction between provisions and reserves..

Answer / h.r. sampath kumar

a) Provision is an amount which is written off or
retained by way of providing for depreciation, renewals
or dimunition in the value of assets or retained by way of
providing for any known liability, the amount of which
cannot be ascertained with substantial accuracy.

b) Reserve shall not include any amount written off or
retained by way of providing for depreciation, renewals
or dimunition in the value of assets or retained by way of
providing for any known liability, the amount of which
cannot be ascertained with substantial accuracy. ( a
negative definition)

Is This Answer Correct ?    0 Yes 0 No

Post New Answer

More Accounting AllOther Interview Questions

PLEASE TELL IF I PAID BY CHEK ON 31 MARCH 2009 AND CLEAR IN THE BANK ON 5.4.2010.PLEASE EXPLAIN IT WHAT EFECT ON F.Y AND A.Y.?

2 Answers  


What is difference between profit, revenue?

1 Answers  


What is mean by Dis-investment

4 Answers   Capital IQ,


Rent paid to Land Lord account is credited to 1.Land Lords account 2.Cash account

2 Answers  


venture capital

11 Answers   Capital IQ,






EXPAND______________OBC

1 Answers  


Paid vehicle insurance of Rs 12000 on 1-1-2009. Pass entry at the of payment and also create prepaid insurance account

0 Answers  


difference between office expense and miscelleanous expense with some examples

0 Answers   Thomson,


What are different types of reports made in tally

2 Answers   Telco,


what is the fund flow and cash flow? what's diffenence between

1 Answers  


What is retained earnings

1 Answers  


sorry this is my personal. But i want to be share because i am confusing stage. This is not related any interview question first in my schooling i studied telugu mideam. After my B.com i joined CA but i didn't pass but i vasted 4yrs. After i did MBA still i am not fluentcy in english i learned 30% english if i will go interviews or not ?

2 Answers  


Categories