What Is The Difference Between Provision & Reserve?

1.	What Is The Difference Between Provision & Reserve?
Answer» <P>PROVISION : Provision is a charge to P&L a/c. RESERVE : Reserve is an appropriation of profit. provision : it is because of legal necessity. reserve : it is a matter of finavial prudence. provision : creation of provision DECREASES the funds of the BUSINESS. reserve : creation of reserve INCREASES the working capital of the business. provision : can be made irrespective of profit / loss reserve : cannot be made when there is loss. provision : are made against expected losses. reserve :safe guard against unexpected losses and there by to strengthen the financial position of the company PROVISION : Provision is a charge to P&L a/c. RESERVE : Reserve is an appropriation of profit. provision : it is because of legal necessity. reserve : it is a matter of finavial prudence. provision : creation of provision decreases the funds of the business. reserve : creation of reserve increases the working capital of the business. provision : can be made irrespective of profit / loss reserve : cannot be made when there is loss. provision : are made against expected losses. reserve :safe guard against unexpected losses and there by to strengthen the financial position of the company

Answer»

<P>PROVISION : Provision is a charge to P&L a/c.

RESERVE : Reserve is an appropriation of profit.

provision : it is because of legal necessity.

reserve : it is a matter of finavial prudence.

provision : creation of provision DECREASES the funds of the BUSINESS.

reserve : creation of reserve INCREASES the working capital of the business.

provision : can be made irrespective of profit / loss

reserve : cannot be made when there is loss.

provision : are made against expected losses.

reserve :safe guard against unexpected losses and there by to strengthen the financial position of the company

PROVISION : Provision is a charge to P&L a/c.