What is provision and reserve and how u treat in account
Answer Posted / dasley clarke
Provision is an amount of money set aside from the
company's profit for unexpected liabilities for example:
provision for bad debt (a debtor who migh not be able to
make paymentsm then that would be a liability on the
company). I t is shown on the liability side of the
Balance Sheet or for bad debts then is take from the
companies assets
Reserves are not funds set aside like Provisions but
reserves are distributed in ways of dividends shares or
bouns
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