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Revision Notes

Provisions and Reserves

ICSE · Class 11 · Accountancy

Quick revision notes for Provisions and Reserves — ICSE Class 11 Accountancy. Key concepts, formulas, and definitions for last-minute revision.

65 questions30 flashcards5 concepts

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Key Topics to Revise

1

Meaning and Nature of Provisions

  • A provision is an amount set aside to meet a future expense or loss whose exact amount is uncertain.
  • A provision is created for a definitely existing or known liability whose exact amount cannot be determined accurately.
  • There is no point in making a provision unless the liability actually exists.
2

Meaning and Nature of Reserves

  • Reserves means amount set aside out of profits to meet future uncertainties.
  • A reserve is created only out of profit and is an appropriation of profit, not a charge against profit.
  • Reserves reduce divisible profits, not net profit.
3

Difference Between Provisions and Reserves

  • A provision is created for meeting a known liability.
  • A reserve is meant for meeting an unknown liability.
  • A provision is a charge against profit and may be created even though there is no profit.
4

Types of Reserves

  • Reserves are broadly classified into open reserves and secret reserves.
  • Open reserves are shown in the balance sheet.
  • Open reserves are of two types: revenue reserves and capital reserves.

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Full Notes

Key Concepts

A provision is an amount setA reserve is an amount setA revenue reserve is created byA capital reserve is created outA general reserve is a revenue

Frequently Asked Questions

What are the important topics in Provisions and Reserves for ICSE Class 11 Accountancy?
Provisions and Reserves covers several key topics that are frequently asked in ICSE Class 11 board exams. Focus on the core concepts listed on this page and practise related questions to build confidence.
How to score full marks in Provisions and Reserves — ICSE Class 11 Accountancy?
Understand the core concepts first, then work through the 65 practice questions available for this chapter. Revise formulas and 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.

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