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What is the difference between a provision and a reserve?

  1. A A provision is a liability of uncertain timing or amount; a reserve is an appropriation of profit
  2. B They are the same
  3. C A reserve is a liability
  4. D A provision is part of equity
Answer

A provision is a liability of uncertain timing or amount; a reserve is an appropriation of profit

Provisions are charged against profit before arriving at net profit. Reserves are appropriations after it.

All CA MCQs

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