Why provisions are made & what will be the Journal entry
for different types of provisions.

Answers were Sorted based on User's Feedback



Why provisions are made & what will be the Journal entry for different types of provisions...

Answer / keerthi d&

Provisision is nothing but,keeping aside out of profits to
bear the uncertain losses in the future.. so provisions
are made to set off the losses of a company or a business
concern which will occur in the future period..
different types of provisions are:-
1.provision for depriciation (on plant & machinary, land &
buildings, accessories, etc..)
2.provision for bad debts (on debtors,bills recievables,
etc..)
3.provision for uncertain losses(fire, theft. spoilage
etc..)

Is This Answer Correct ?    62 Yes 15 No

Why provisions are made & what will be the Journal entry for different types of provisions...

Answer / ammu

provision are made because they are payable in future not
or next accounting year.

JOURNAL ENTRY

company pay gratuity and each year an entry is pass for the
same which is called Provision for gratuity

so entry will be

Gratuity A/c dr
Provision for Gratuity a/c

this is a provision entry ( above )

Profit & loss a/c DR
Gratuity A/c

Is This Answer Correct ?    66 Yes 27 No

Why provisions are made & what will be the Journal entry for different types of provisions...

Answer / sajjad1

When Provosion is Made then Pass This Entry

Gratuity Fund (Dr)
Provision for Grauity Fund (Cr)
When Its Occur

Provision for Grauiyy Fund (Dr)
Bank/Casg (cr)

Is This Answer Correct ?    43 Yes 9 No

Why provisions are made & what will be the Journal entry for different types of provisions...

Answer / acca

AS per IAS 37 , provision is a liability with the uncertain amount and timing. 

recognized provision as Liability when these condition meet.

1)Present obligation: under which consider two obligation legal obligation and constructive obligation.

 2) Past event 

 3) future outflow of cash is probable 

 4) the amount of provision can be measure reliably at the time of book provision.

As per IAS 37 can be recognized certain things as provision. 

Doubtull debt 
depreciation

in the case of gratuity:at the time of occurs 

Dr: Gratuity Exp a/c
Cr: provision for gratuity a/c 


provision of liability should be account in the statement of financial position at the present value if its beyond more than one year.  

Is This Answer Correct ?    18 Yes 2 No

Post New Answer

More Accounting AllOther Interview Questions

what do you mean by semi-variable cost?

4 Answers   Capital IQ,


I have complited my ERP course in FICO module. Now I want to work in ERP package. Please suggest me how I will apply for the organisation works in ERP environment.

0 Answers  


Explain kinds of accounts

4 Answers  


paid two years rent N1200, bought Motor van for cash N3000

0 Answers  


what is treasury stock

3 Answers   Capital IQ,






What is the entry for Salary for the month of March if the books closed on 31-03. Before 31st March and after 31st March?

10 Answers   IBM,


out standing salaries goes to whiich A/C I mean personal(or) real(or)nominal a/c

14 Answers  


who is the payee of the promissory note

1 Answers   Accenture,


THE DEBIT BALANCE OF THE P&L A/C IS SHOWN IN WHICH COLUMN OF BALANCE SHEET

59 Answers   Capital IQ, College School Exams Tests, Renault, State Bank Of India SBI, WS,


formula for return on equity

1 Answers   FactSet Systems,


Raj & Raj Ltd purchased a machinery on 01.01.1996 for Rs.88,000.The life of the machine estimated to be 5 Yrs.It was calculated that the old machinery would fetch Rs.8000 at the end of its useful life.it was decided to replace the machinery at the end of the 5th year by setting up depreciation fund and invest the annual depreciation (along with interest earned each year) in gilt edged securities carrying interest at 5% p.a. At the end of the 5th Year the securities were sold for Rs.9000.As per the sinking fund table Rs.14,478 is to be invested every year.A new machine was purchased on 01.01.2001 for Rs.1,00,000.pass the journal entries and show the ledger accounts

0 Answers  


plz send me the accounting questions and answers of bank of america.

0 Answers   Accenture, Bank Of America,


Categories