Difference between Provision & Reserve?
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Answer Posted / 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 |
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