Difference between Provision & Reserve?

Answers were Sorted based on User's Feedback



Difference between Provision & Reserve?..

Answer / naresh.l

Provision is charged to p/l a/c where as reserve is an
appropriation of profit.
Provision is must charged to p/l a/c before calculating
the net profit or loss, but reserve can made only when there
is profit.
Provision is created for specific object, reserve is
created for probable losses.
Provision reduces the net profit and are not invested
in outside securities. Reserves reduces divisible profit can
be invested in outside securities.

Is This Answer Correct ?    270 Yes 16 No

Difference between Provision & Reserve?..

Answer / kiran kumar

The money which is kept aside for a known event is said to
be PROVISION

The money which is kept aside for unknown event is said to
be RESERVE

Is This Answer Correct ?    135 Yes 33 No

Difference between Provision & Reserve?..

Answer / kiran

provision is charged in p&l a/c, it is for upcoming liability
for example : income tax

reserve: which is kept a side for un known events wheather
it is future losses/new installations etc.

Is This Answer Correct ?    63 Yes 17 No

Difference between Provision & Reserve?..

Answer / harish

provision is a charge to the profit whilst a reserve is an appropriation to the profit. Reserves belongs to the owners equity side while provision can be on a liability side or on the assets side but as a negative asset

Is This Answer Correct ?    29 Yes 7 No

Difference between Provision & Reserve?..

Answer / hemanshu

Provison is purely related with P & L, which we can called
upcoming liablities. and its sure to paid.

Reserve is not sure to paid or any consideartin but it like
a protecter for any uncertainity of any Exp.

Is This Answer Correct ?    15 Yes 7 No

Difference between Provision & Reserve?..

Answer / suraj somani

Reserves are created when there are profit.
But provisions are to be created even when there are losses..

Is This Answer Correct ?    7 Yes 1 No

Difference between Provision & Reserve?..

Answer / sandhia

Provision is a charge on profit where as reserve is an appropriation of profit.
Provision is created on known liability where as reserve is created on unknown liability.
Provision is created even if there is no profit where as reserve is created when there is enough profit.

Is This Answer Correct ?    6 Yes 1 No

Difference between Provision & Reserve?..

Answer / nishanth loyal

Provision is considered as an expense. so that the amount is
entered in the P&L a/c.It is allotted for the specific
purposes. Then only we are going to know Profit or loss.

After finding that the company is earning profit we are
going to allot the reserve out of profit for general purpose.

Both the amount is for precautionary purpose. But the former
one is considered as expense and latter is considered as
liability.

Is This Answer Correct ?    2 Yes 1 No

Difference between Provision & Reserve?..

Answer / akhil gupta

Reserve is created against the charge of the profit and loss appropriation account. Provision is created against the charge of the profit and loss account.
Main objective of reserve is to strengthen the financial position and to meet future unknown losses and liabilities. Objective of provision is to meet known losses and liabilities the amount of which is not certain.
Reserve is created when there is enough profit in the business. Provision is created even if there is loss in the business.

Is This Answer Correct ?    4 Yes 5 No

Difference between Provision & Reserve?..

Answer / pun

Why not we must to creatd Provision & Reserve?
And if we're not recognized what the effect will be?

Is This Answer Correct ?    13 Yes 16 No

Post New Answer

More Accounting AllOther Interview Questions

What do you mean by Accrued Expenses ?

11 Answers   Direct Shipping Services, IBM,


What does my credit score mean?

0 Answers  


How to adjust payment transfer amount one party to another party in Tally?

1 Answers  


Expand ________GHMC

1 Answers  


what is diffarant tds and incometex.

2 Answers  






What is the proces of transfer of goods from one branc at Mumbai to the other jBranch at Ajhmedabad? Clearly state the provisions of the relevant Act?

1 Answers  


What is the difference between cash and mercantile system of accounting? Which according to you is a better system & why?

2 Answers  


expand L R

1 Answers  


why you would like to work for the our(AIRLINE) Group ???

1 Answers   Emirates,


diiffrence b/w provsion & reserve

7 Answers  


1. what is debenture? 2.Why company will issue shares? 3. What is audit? 4. What is the role of finance department? 5. What is mutual fund?

0 Answers   IBM,


Expand---------BRT

2 Answers  


Categories