Provision and reserve
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
12 September 2012
I WANT TO KNOW THAT WHAT IS PROVISION AND RESERVE? IS THERE ANY DIFFERENCE IN PROVISION AND RESERVE AND WHAT SHOULD BE ENTRY FOR PROVISION FOR DOUBTFUL DEBT AND RESERVE FOR DOUBTFUL DEBT.
12 September 2012
Reserves
1. It is created by debiting the profit and loss appropriation account.
2. It is created to meet an unknown liability, or to strengthen the financial position of the company or for equalization of dividends etc.
3. A reserve is created only when there is profit in the business.
4. It can be distributed among shareholders as dividend.
5. The reserve is created without taking into consideration the actual amount required except in the case of redemption of debentures when a definite sum is set aside.
6. Creation of reserve depends upon the financial policy of the business and discretion of its management.
7. It is usually shown on the liability side of the balance sheet as it is not a specific reserve.
Provisions
1. It is created by debiting the profit and loss account.
2. It is created to meet a known liability or a specific contingency, e.g.. provision for bad and doubtful debts, or provision for depreciation etc.
3. A provision is created irrespective of whether there is profit or loss in the business.
4. It is not available for distribution as dividend among shareholders.
5. A provision is made for a definite amount and, therefore, a definite sum is set aside every year to meet the known contingency.
6. Making of a provision is a must to meet known liability or contingency.
7. The provision is generally shown on the assets side of the balance sheet.
1. It is created by debiting the profit and loss appropriation account.
2. It is created to meet an unknown liability, or to strengthen the financial position of the company or for equalization of dividends etc.
3. A reserve is created only when there is profit in the business.
4. It can be distributed among shareholders as dividend.
5. The reserve is created without taking into consideration the actual amount required except in the case of redemption of debentures when a definite sum is set aside.
6. Creation of reserve depends upon the financial policy of the business and discretion of its management.
7. It is usually shown on the liability side of the balance sheet as it is not a specific reserve.
Provisions
1. It is created by debiting the profit and loss account.
2. It is created to meet a known liability or a specific contingency, e.g.. provision for bad and doubtful debts, or provision for depreciation etc.
3. A provision is created irrespective of whether there is profit or loss in the business.
4. It is not available for distribution as dividend among shareholders.
5. A provision is made for a definite amount and, therefore, a definite sum is set aside every year to meet the known contingency.
6. Making of a provision is a must to meet known liability or contingency.
7. The provision is generally shown on the assets side of the balance sheet.
12 September 2012
Reserves
1. It is created by debiting the profit and loss appropriation account.
2. It is created to meet an unknown liability, or to strengthen the financial position of the company or for equalization of dividends etc.
3. A reserve is created only when there is profit in the business.
4. It can be distributed among shareholders as dividend.
5. The reserve is created without taking into consideration the actual amount required except in the case of redemption of debentures when a definite sum is set aside.
6. Creation of reserve depends upon the financial policy of the business and discretion of its management.
7. It is usually shown on the liability side of the balance sheet as it is not a specific reserve.
Provisions
1. It is created by debiting the profit and loss account.
2. It is created to meet a known liability or a specific contingency, e.g.. provision for bad and doubtful debts, or provision for depreciation etc.
3. A provision is created irrespective of whether there is profit or loss in the business.
4. It is not available for distribution as dividend among shareholders.
5. A provision is made for a definite amount and, therefore, a definite sum is set aside every year to meet the known contingency.
6. Making of a provision is a must to meet known liability or contingency.
7. The provision is generally shown on the assets side of the balance sheet.
1. It is created by debiting the profit and loss appropriation account.
2. It is created to meet an unknown liability, or to strengthen the financial position of the company or for equalization of dividends etc.
3. A reserve is created only when there is profit in the business.
4. It can be distributed among shareholders as dividend.
5. The reserve is created without taking into consideration the actual amount required except in the case of redemption of debentures when a definite sum is set aside.
6. Creation of reserve depends upon the financial policy of the business and discretion of its management.
7. It is usually shown on the liability side of the balance sheet as it is not a specific reserve.
Provisions
1. It is created by debiting the profit and loss account.
2. It is created to meet a known liability or a specific contingency, e.g.. provision for bad and doubtful debts, or provision for depreciation etc.
3. A provision is created irrespective of whether there is profit or loss in the business.
4. It is not available for distribution as dividend among shareholders.
5. A provision is made for a definite amount and, therefore, a definite sum is set aside every year to meet the known contingency.
6. Making of a provision is a must to meet known liability or contingency.
7. The provision is generally shown on the assets side of the balance sheet.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- GSTR-1A How to update Invoice
- Excess salary payment.
- Stamp Paper for partnership firm change new income tax 2025
- Capital gain from sale of house property
- INTEREST APPLICABLE ON ITC REVERSAL PORTION
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- TDS on Purchase of Immovable Property by NRI from NRI
- Annual return in Gst
- When TDS on GST applied
- Before GSTAT- APL-02 Vs APL-04
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
- Address Change to another state of a Registered Trust with 12AB approval
- Updated return in budget 2026
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
