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unit-22-provisions-and-reserves

Unit-22 Provisions And Reserves

You will learn about the meaning of provision and reserve, the difference between provision and reserve, and also the various types of reserves.

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Define Provision.

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Learning Pundits Content Team

Written on Jun 25, 2019 12:46:16 PM

Provision is a generally accepted accounting principle that while measuring income for an accounting year, all possible losses and expenses must be taken into account. Hence, we usually provide for depreciation on fixed assets and their repairs, renewal, etc.

Similarly, there may be certain liabilities/losses the amounts of which cannot be ascertained with substantial accuracy such as dispute claims for damages, bad debts, and so on.