DK Goel Solutions Chapter 17 Provisions and Reserves

DK Goel Accountancy Class 11 Solutions Chapter 17 Provisions and Reserves which is outlined by expert Accountancy teachers from the latest version of DK Goel Class 11 Accountancy books. We at BYJU’S provide DK Goel Solutions to assist students to comprehend all the theories in particular. There are numerous concepts in Accountancy, but the concepts of Trial Balance, Depreciation and Bank Reconciliation Statement (BRS) are required.

DK Goel Accountancy Class 11 Solutions – Chapter 17

Question 1

Define Provisions.

Answer: According to the Companies Act, the term ‘Provisions’ refers to any of the following amounts:

  • The amount retained or written off by the way of providing for depreciation, renewals and diminution in the value of assets

Examples of Provisions:

  • Provision for Taxation
  • Provision for bad and doubtful debts
  • Provision for depreciation of assets
  • Provision for discount on debtors

Question 2

Define Reserves.

Answer: Reserves refer to the amount that is set aside out of profits and other surpluses to meet future uncertainties. In other words, a reserve is meant for meeting any sort of an unknown liability or losses in the future.

Question 3

Mention the differences between the Provisions and Reserves.

Answer:

Provisions

Reserves

According to the Companies Act, the term ‘Provisions’ refers to any of the following amounts:

  • The amount retained or written off by the way of providing for depreciation, renewals and diminution in the value of assets

Reserves refer to the amount that is set aside out of profits and other surpluses to meet future uncertainties. In other words, a reserve is meant for meeting any sort of an unknown liability or losses in the future.

It is created by crediting to Profit and Loss a/c.

It is not created by debiting to Profit and Loss a/c; but, via Profit and Loss Appropriation a/c.

It cannot be used for allocation as dividends among the shareholders.

It can be used for allocation as dividends among the shareholders.

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