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What is the Provision? What is the Entry for Provision?

Open uri20170510 32134 7ezpi6?1494421819 jaggu asked almost 3 years ago

Hi I am one of the CA student. May I know, What is the Provision? What is the Entry for Provision?

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5 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 acharya answered over 2 years ago

For example, you provide for your electricity bill as shown on the invoice at the end of the month but which is payable only in the following month. --We make provision in order to MATCH the revenue derived in a particular period to the expense incurred in that period. The Matching Concept. --A provision should be recognised in the financial statements when: (a) an enterprise has a present obligation as a result of a past event; (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered almost 3 years ago

> What is the Provision? What is the Entry for Provision? -- Provision in accounting means providing for any expenditure before paying it. It is used for determining correct profit or loss of a financial year. --A provision is a debit entry for an expense that has accrued at the end of an accounting period but is not yet due or payable. --For example, you provide for your electricity bill as shown on the invoice at the end of the month but which is payable only in the following month. --We make provision in order to MATCH the revenue derived in a particular period to the expense incurred in that period. The Matching Concept. --A provision should be recognised in the financial statements when: (a) an enterprise has a present obligation as a result of a past event; (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and (c) a reliable estimate can be made of the amount of the obligation. > The entry for the provision in the books To make entry in the books always debit the expenses for which provision in needed and credit the Provision for that expenses as shown below; Income tax a/c dr. To provision for Income tax a/c --The format is Expenses a/c dr. To provision for expenses a/c Just substitute the expenses account with the name of the expenses

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Open uri20170510 32134 1c996lj?1494421732 Anil answered almost 3 years ago

Provision means A provision is the amount of an expense that an entity elects to recognize now, before it has precise information about the exact amount of the expense. For example, an entity routinely records provisions for bad debts, sales allowances, and inventory obsolescence. A provision should be recognized as an expense when the occurrence of the related obligation is probable, and one can reasonably estimate the amount of the expense. A provision is recorded in a liability account, which is typically classified on the balance sheet as a current liability. The accounting staff should regularly review the status of all recognized provisions, to see if they should be adjusted. liabilities It means payable account it's an very usefull for controlling payable accounts like telephone charges, ESIC accounts, EPF accounts, EPF payable accounts Dr to EPF accounts

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered almost 3 years ago

Provision meansA provision is the amount of an expense that an entity elects to recognize now, before it has precise information about the exact amount of the expense. For example, an entity routinely records provisions for bad debts, sales allowances, and inventory obsolescence.

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Open uri20170510 32134 s5bvk0?1494421637 ARJUN PRATAP SINGH answered almost 3 years ago

Dear Friend, as far as your query is concerned that What is the Provision? What is the Entry for Provision? Let me informed that Provision meansA provision is the amount of an expense that an entity elects to recognize now, before it has precise information about the exact amount of the expense. For example, an entity routinely records provisions for bad debts, sales allowances, and inventory obsolescence. A provision should be recognized as an expense when the occurrence of the related obligation is probable, and one can reasonably estimate the amount of the expense. A provision is recorded in a liability account, which is typically classified on the balance sheet as a current liability. The accounting staff should regularly review the status of all recognized provisions, to see if they should be adjusted. liabilities It means payable account it's an very usefull for controlling payable accounts like telephone charges, ESIC accounts, EPF accounts, EPF payable accounts Dr to EPF accounts ESIC payable accounts Dr to ESIC account Hope answer was helpful to you Regards, Arjun Pratap Singh

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