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what are the similarities between provision and reserve?
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Answer / bhagya
Provision
we are creating provision for expenses which are going to
occur in future we do not konw the exact future expenses
Reserve
out of profit some protion of allotted as a reserve balance
are distribute as a dividend to shareholders
this reserve use for future business investment
Similarities between provision & reserve we are allocating
some amount ie., unknown amount (Unknown exp., or unknown
purpose of reserve creating (fe.,)we do not know the
investment amount
| Is This Answer Correct ? | 5 Yes | 3 No |
Answer / arun kumar
provision is the amount kept a side for future known
liabilities
reserve is an amount kept a side to face future risk occur
in the business
| Is This Answer Correct ? | 4 Yes | 3 No |
Answer / h.r. sreepada bhagi
As mentioned by Bhagya, accounting for expenses for a
period, the amount is not known exactly but is reasonable
estimated based on the past & showing would be liabilities
in the Balance Sheet. These provisions need to be reversed
in the subsequent accounting period and the expense shall be
accounted for exact amount, when the supporting bill is
received or the expense is ascertained with proper back-up
documents. provisioning is necessary in 'Accrual Concept' of
Accounting to match expenses with revenues in any accounting
period.
Reserve - As mentioned above is profit set aside for
specific or general Purpose. Besides this there can be
Depreciation Reserve, which represents accumulated
depreciation on Fixed Assets (This's an exception).
Provisions are part of liabilities & Reserves form part of
'Net Worth'
Provisions are shown as Provisions for Expenses under
'Current Liabilities & Provisions' & Reserves can be shown
as 'General Reserve', Dividend Equalisation Reserve',
Investment Allowance Reserve', 'Depreciation Reserve', etc,
in the 'Balance Sheet'.
| Is This Answer Correct ? | 2 Yes | 2 No |
Answer / k.thirumamagal
as devi said provision is charge against profit and reserves
are appropriation of profit. provision is minimum amount
which is set aside by the company to meet the known
liabilities and reserve is set aside to meet the unknown
liabilities.
| Is This Answer Correct ? | 0 Yes | 0 No |
Answer / devi
simply provision means which will create against the profit
and reserve means appripriation of profit
| Is This Answer Correct ? | 2 Yes | 3 No |
Answer / mohammed rizwan
provision means the debts which are not covered during the
accounting period.
reserve means the profit which are kept aside for future
purpose is known as reserve.
| Is This Answer Correct ? | 2 Yes | 4 No |
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