Please Explain what is provision simple way

Accountancy

What is provision and why do we need provision in accounting and what is provision for bad debt and provision for depreciation

Dhakshana Dhakshana

CFA L2

★ 18K+

26-Sep-21 11:49

549

Answers (4)

PROVISION Provision represent funds put aside by a company to cover anticipanted losses in the future In other words provision is a liability of uncertain timing and amount provision are listed on a company's balance sheet the financial statement are key to both financial modeling and accounting We need provision in accounting for written off future losses like- depriceation,bed debt

Sejal Shivani

CA Foundation

★ 5K+

26-Sep-21 14:16

From where do we put aside such fund ? Is it From Debtor ?

Thread Starter

Dhakshana Dhakshana

CFA L2

★ 18K+

26-Sep-21 14:58

Thread Starter

Dhakshana Dhakshana

From where do we put aside such fund ? Is it From Debtor ?

From company's profit

Kritika Dash

CA Inter

★ 235

26-Sep-21 16:37

Amount put aside from the profit in order to meet a probable future expense or a reduction in the asset value. Its an estimate

Sudha Reddy

CA Final

★ 20K+

27-Sep-21 10:05