Question

“Provision is a charge against profit whereas Reserves are the appropriation of

profit.” Elaborate the statement.​

Answer 1

Answer:

it is because the maintenance of provision is mandatory in every situation. while reserves are not mandatory to maintain by an firm it is created our of profit as per company's profit hence it is appropriation of profit.

Answer 2

Answer:

The provision means any  amount set aside as a charge against profit to meet a loss, the amount of which cannot be determined with substantial accuracy. Reserve refers to amount set apart from profit and loss account to meet unforeseen contingencies.  So it can be concluded That Provision is a charge against profit whereas reserve  is an appropriation of Profit.

Explanation: