sagar

• Oct 7th, 2006

 

Provisions are created in books as they are anticipated Ex : provision for depreciation

Reserves are created in books as a part of profits which might used to purchase assets or to declare dividends.

Note: dividends are declared only after providing depreciation in books as per sec 205 of the companies act.

Ramu

• Nov 10th, 2006

 

Provision is made against "certain" future liability, when amount is not certain.

For ex: Provision for Tax, tax is a definite liability, when we dont know how much we have towards tax, then we have to provide some amount to meet that in future.

Reserve is made is made out of profits, to meet "uncertain" future liabilities.

srinu

• Apr 4th, 2007

 

provision is charge against profit  for specific future contingencies.

reserve is appropriation of profits for  any future contingencies

kinjal

• Aug 4th, 2007

 

Except for general reserve, all reserves are created for specific future liability, eg : capital reserve, debenture redemption reserve, investment fluctuation reserve,etc

rameshnamasivayam

 Profile Answers by rameshnamasivayam 

• Sep 8th, 2008

 

Provisions are to allocate an amount to meetout the requirement.

Reserves are made avaialble to meet business demands eg., meet out obsoletions, to meet out expansions etc.,

By and large provisions will have revisions, reserves will not have.