difference between reserve and provision . don't smap please
Answers
Explanation:
The Provision means to keep some money for a known liability which is probable to arise after a certain time. The Reserve is to retain some money from the profit to for any particular future use. The amount of provision cannot be used to pay off dividends, but the amount of the reserves can be used for so.
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Answer:
Explanation:
provision vs reserveIn the business glossary, provision implies money set aside to cover an anticipated liability or loss. Look the other term Reserve, reserves refer to withholding some amount for any use in future. Provision and reserves are two terms which are highly confused, but they carry different meanings.
While running a business, some expenses or losses relate to the current financial year, but their amount is not known, as they are not yet incurred. For such expenses/losses provision is created, as a charge against profit. Likewise, a certain portion of the profit is retained in the business as reserves, to utilize them at the time of need, or to invest it in growth activities, or to cover future contingencies. Reserves are the only appropriation of profit.
So, the basic difference between provision and reserve is that net profit is calculated only after giving effect to all provisions, whereas reserves are created only after reckoning profit. Check out the article to know some more differences.
Content: Provision Vs Reserve
Comparison Chart
Definition
Key Differences
Conclusion
Comparison Chart
BASIS FOR COMPARISON PROVISION RESERVE
Meaning The Provision means to provide for a future expected liability. Reserves means to retain a part of profit for future