![](https://thakurani.sgp1.digitaloceanspaces.com/media/tribes/oth_6.jpg)
Explain briefly on the topic of “Provisions versus Specific Reserves”.
Explain briefly on the topic of “Provisions versus Specific Reserves”.
Punch your phone number in the box below
I’II send an OTP on it.
I won’t confide your phone with anyone.
I appreciate your effort.
May I request you to select one of the reasons for purging from below.
Disrespectful or rude towards a person or a group.
Promotes an undisclosed link or product or service.
Not seeking genuine answers .
Vulgar, Obscene, abusive etc..
Not a post on law or business.
Copied from other website or source and pasted here.
Has bad format, grammar, spelling so requires moderatation.
Thank you,
Yours sincerely,
Aaradhika, Thakurani's bestie
I appreciate your effort.
May I request you to select one of the reasons for purging from below.
Disrespectful or rude towards a person or a group.
Promotes an undisclosed link or product or service.
Not seeking genuine answers .
Vulgar, Obscene, abusive etc..
Not a post on law or business.
Copied from other website or source and pasted here.
Has bad format, grammar, spelling so requires moderatation.
Thank you,
Yours sincerely,
Aaradhika, Thakurani's bestie
Explain briefly on the topic of “Provisions versus Specific Reserves”.
Explain briefly on the topic of “Provisions versus Specific Reserves”.
Provisions
A provision is an amount that you put in aside in your accounts to cover a future liability.
The purpose of a provision is to make a current year’s balance more accurate, as there may be costs which could, to some extent, be accounted for in either the current or previous financial year. These costs that distinctly belong to a specific year could be misleading if accounted for in the future.
A provision is not a form of saving, even though it is an amount that is put aside for a future plausible cost or obligation. Provisions resulting impact is a reduction in the company's equity.
When accounting, provisions are recognized on the balance sheet and then expensed on the income statement.
Specific Reserves
On the other hand, a specific reserve is created for some definite purpose out of the profits of the company. The purpose may be anything connected with the business which the Article of Association or, the directors want to be provided for, such as dividend equalization, replacement of fixed assets, expansion of the organization, Income-tax liability for future foreign exchange fluctuation etc.
Though the concerned amounts are carried under the earmarked heads, these are available for distribution as dividend on the recommendation of directors but subject to the approval of shareholders, since these are created by appropriation of profits.
To create any specific reserve, existence of profit is essential. Some of the specific reserves may be required under the contractual obligations or legal compulsion, for example:
Thus provisions are amounts set apart to meet specific liabilities. These must be provided for regardless of the fact whether or not any profit has been earned by the concern. While to create any specific reserve, existence of profit is essential.
You marked successfully unsatisfactory answer
My Dear ,
I thank you for marking the answer as satisfactory.
I have noted.
It will be very nice and helpful to our other members (and the answerer too) if you mark your satisfaction level on the grade scale below.
Please feel free to mark any point. I don't share it with anyone. I use it for doing my internal calculations only. I use these calculations to evaluate the service performance of the relevant virtuoso.
Here is the grade scale:
Virtuoso could have given a better solution.
I am satisfied with virtuoso's answer.
An excellent answer I am impressed.
I will ask my next question to this virtuoso only.
Thank you,
Yours sincerely,
Anu, Thakurani's bestie
Check your phone. I have messaged an OTP. It is a 6 digit number. Feed it in the box below
Do you want me to resend the OTP? Yes resend itCheck your phone. I have messaged an OTP. It is a 6 digit number. Feed it in the box below
Do you want me to resend the OTP? Yes resend itCheck your phone. I have messaged an OTP. It is a 5 digit number. Feed it in the box below
Do you want me to resend the OTP? Yes resend itThanks, for confirming your phone number.
You can change it in your profile.Are you a tax professional?
If yes, then you can earn
money through me.
download the mobile app
You have successfully created your diary. You can access it from 'Store/Your Stuff' section.
OK