Differentiate between Provision and Reserve on the basis of ‘disclosure in balance sheet’.
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Explanation:Provision is a sum of money that has been kept away to meet anticipated financial obligations in future. Creation of provisions is mandatory as per law. Reserve is a sum of money set aside from the total earnings of a company to meet unforeseen contingencies. Creation of reserve depends on the availability of profits.
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In short, a reserve is an appropriation of profit for a specific purpose, while a provision is a charge for an estimated expense
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