Question

Distinguish between Reserve and Provision.

Answer 1

Differences between Reserve and Provision:

$\begin{array}{cccc}& \text{Reserve}& & \text{Provision}\\ 1.& \text{Reserve in an appropriation of profit.}& 1.& \text{A provision is a charge on profit}\\ 2.& \text{Main purpose of creating a reserve is to}& 2.& \text{Main purpose of provision is to meet the}\\ & \text{strengthen the financial position and to meet the}& & \text{known liability.}\\ & \text{unforeseen losses or liabilities.}& & \end{array}$