Chapter 8
Reserves and Provisions
CHAPTER OUTLINE
8.1 CONCEPT OF RESERVES
Reserves are amounts appropriated out of profits, which are not intended to meet any liability, contingency, commitment or diminution in the value of assets known to exist at the date of the balance sheet.
According to American Institute of Accountants, “the use of the term reserve is limited to indicate that an undivided portion of the asset is being held or retained for general or specific purposes”.
8.2 CONCEPT OF PROVISIONS
Provisions are amounts charged against revenue to provide for the following:
- Depreciation, renewals or diminution ...
Get Auditing: Principles and Techniques now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
