Here we detail about the difference between Provisions and Reserves. Provisions: 1. Provisions are charge on profits. 2. Creation of provision does not depend on profit. They have to be created even if there are inadequate profits or heavy losses. 3. They are created to meet a known liability 4. Creation of provision is necessary as per law. 5. Provisions [...]
Let us make in-depth study of the meaning, importance and types of reserves. Meaning of Reserves: Reserve means an appropriation of profits or other surpluses to strengthen the liquid resources of the business enterprise and not for meeting any liability, contingency or any commitment of the business. According to William Pickles, "Reserve means the amount set aside out of profit [...]
Let us make in-depth study of the concept, objectives and types of provisions. Concept: Provision means setting aside a part of the profits for meeting a liability in future, the amount of which is not known accurately at the time of finalization of financial statements. In any business, there may be some expected or unexpected eventualities which must be met [...]