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Question
Present liability of uncertain amount, which can be measured reliably by using a substantial degree of estimation, is termed as ____________.
Present liability of uncertain amount, which can be measured reliably by using a substantial degree of estimation, is termed as ____________.
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Solution
The correct option is A Provision
Provision is an amount set aside, by charging it to profit and loss account or statement of profit and loss, to provide for a known liability the amount of which cannot be determined with accuracy. It is charged in the profit and loss account on an estimate basis. In other words, a provision is a charge against profit for the purpose of providing any liability or loss.
Provision is an amount set aside, by charging it to profit and loss account or statement of profit and loss, to provide for a known liability the amount of which cannot be determined with accuracy. It is charged in the profit and loss account on an estimate basis. In other words, a provision is a charge against profit for the purpose of providing any liability or loss.
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