Answer Posted / vivek kanna
PROVISIONS are maintained by the company in order to face
the future uncertainities for example provision for bad
debts,provision for depreciation so on.provisions will be
charged to p&l account before arriving net profit,and the
amount charged is used for specific purpose only that is
provision for bad debts can be used for the bad debts
unrecoverd etc.
on the other hand RESERVES are maintained to meet the
future necessites.The Reserves are charged after arriving
profits and can be used by business for any purpose example
payment of dividend,redemption of debentures so on.
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