what do u mean by provision in accounts.?
- rehman vohraLv 61 decade agoFavourite answer
Provision in accounts is referred to as a process by which a certain amount is set aside from the current year's profits to meet future uncertain liabilities or losses.
For instance, provision for doubtful debts is an estimate based on the judgment of the management that a certain percentage of the receivables will be delinquent and thereby cause a loss to the business.
- 1 decade ago
At the time of finalisation of accounts for a particular year needs o understand as to which expenses for this year likely to affect the cash flow in a next year is provided before working out profit and loss. The said expenses list will be provided and after passing a journal entry it will be considered as expenses duly verified and audited. In the opening next year books such expenses will be reversed and actual expenses if falls will be accounted on cash basis.The principle is to having taken care off those expenses in the same year for which P&L is getting finalised.This way such liabilities will be provided known as provision for expenses.e.g. Encahments of leave.
- What do you think of the answers? You can sign in to give your opinion on the answer.
- 5 years ago
can we allocate the provision for other debtors?
- KokitaLv 44 years ago
most probably (in for profit business), this would be "sale of goods or services"