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Chapter Summary

Provisions and Reserves — Chapter Summary

ICSE · Class 11 · Accountancy

Summary of Provisions and Reserves for ICSE Class 11 Accountancy. Part of the ICSE Class 11 Accountancy syllabus.

65 questions30 flashcards2 formulas & key relations5 concepts

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Overview

Provisions and reserves are created to make a business financially stronger and to deal with future uncertainties. A provision is made for a known liability whose exact amount is uncertain, while a reserve is created out of profits to meet future uncertainty or to strengthen the financial position.

Key Concepts

A provision is an amount set

A provision is an amount set aside to meet a future expense or loss whose exact amount is uncertain. It is created for a definitely existing or known

A reserve is an amount set

A reserve is an amount set aside out of profits to meet future uncertainties. It is not created for a known liability or asset decline. It is an appro

A revenue reserve is created by

A revenue reserve is created by setting aside part of net profit from normal business operations. It is available for distribution as dividend and inc

A capital reserve is created out

A capital reserve is created out of capital profits, such as profit on sale of fixed assets, premium on issue of shares and debentures, and profit pri

A general reserve is a revenue

A general reserve is a revenue reserve created out of profits to meet unforeseen contingency. It is not made for a specific purpose and is also called

Learning Objectives

  • To understand the meaning of provisions and reserves
  • To distinguish clearly between provisions and reserves
  • To study the types of reserves, including revenue reserve and capital reserve
  • To understand general reserve, specific reserve, secret reserve, and reserve fund
  • To learn why provisions and reserves are created in business

Frequently Asked Questions

What are the important topics in Provisions and Reserves for ICSE Class 11 Accountancy?
Key topics in Provisions and Reserves include Meaning and Nature of Provisions, Meaning and Nature of Reserves, Difference Between Provisions and Reserves, Types of Reserves. Study these first, then practise questions on each for Class 11 exams.
How should I revise Provisions and Reserves for Class 11 exams?
Learn the core ideas first, then work through the 65 practice questions on Provisions and Reserves. Revise definitions regularly and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

More resources for Provisions and Reserves

All ICSE Class 11 Accountancy Chapter Summary

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