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Provision for expenses

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Aarthi.P asked over 2 years ago

Can u explain the meaning of provision for expenses with Eg

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7 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Sindhura answered over 1 year ago

Provision means a liability arising from past activity. For example if you are paying salary by the 10 th of next month, in order to close the entries of the current month you are required to create a provisional entry as Salary account Dr To salary payable And once the actual payment is made the accounting entry should be Salary payable account Dr To bank .

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Picsjoin 2017224123730582 Archana answered about 2 years ago

Hie Srini, - Provision means liabilities It means payable account it's a very useful for controlling payable accounts like telephone charges, ESIC accounts, EPF accounts. Example- - We have not got the expense bill so, at the time of accounting Provision Expense a/c dr s.creditor a/c cr

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Surbhi answered over 2 years ago

In financial accounting, a provision is an account which records a present liability of an entity. The recording of the liability in the entity's balance sheet is matched to an appropriate expense account in the entity's income statement. Eg: Provision for Bad and doubtful debts.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 priya answered over 2 years ago

hi Srini In financial accounting, a provision is an account which records a present liability of an entity. The recording of the liability in the entity's balance sheet is matched to an appropriate expense account in the entity's income statement. While to non-professionals it has the connotation of a pool of cash set aside to meet a future liability. A provision can be a liability of uncertain timing or amount. A liability, in turn, is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. A provision shall be recognized if the following criteria are fulfilled: 1. An entity has a present obligation as a result of a past event; 2. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Pankaj answered over 2 years ago

In financial accounting, a provision is an account which records a present liability of an entity. The recording of the liability in the entity's balance sheet is matched to an appropriate expense account in the entity's income statement. While to non-professionals it has the connotation of a pool of cash set aside to meet a future liability. A provision can be a liability of uncertain timing or amount. A liability, in turn, is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. A provision shall be recognized if the following criteria are fulfilled: 1. An entity has a present obligation as a result of a past event; 2. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 HIMANSHU answered over 2 years ago

In financial accounting, a provision is an account which records a present liability of an entity. The recording of the liability in the entity's balance sheet is matched to an appropriate expense account in the entity's income statement. While to non-professionals it has the connotation of a pool of cash set aside to meet a future liability. A provision can be a liability of uncertain timing or amount. A liability, in turn, is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. A provision shall be recognized if the following criteria are fulfilled: 1. An entity has a present obligation as a result of a past event; 2. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; 3. A reliable estimate can be made of the amount of the obligation.

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Open uri20170510 32134 ivjxpn?1494421728 Shreedhar Sutar answered over 2 years ago

Hi Srini In financial accounting, a provision is an account which records a present liability of an entity. The recording of the liability in the entity's balance sheet is matched to an appropriate expense account in the entity's income statement. While to non-professionals it has the connotation of a pool of cash set aside to meet a future liability. A provision can be a liability of uncertain timing or amount. A liability, in turn, is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. A provision shall be recognized if the following criteria are fulfilled: 1. An entity has a present obligation as a result of a past event; 2. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; 3. A reliable estimate can be made of the amount of the obligation. 4. A specific current statement, the entity will accept certain responsibilities and other parties have valid expectations that the entity will discharge its responsibilities. No provision, however, is recognized for costs that need to be incurred to operate in the future. Also, an obligation always involves another party to whom the obligation is owed (even if this party is unknown). Eg:- Provision for Doubtful Debts, Provision for Gratuity, Provision for Loss of Subsidiary.

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