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Chapter Summary

Provisions and Reserves

NIOS · Class 10 · Accountancy

Summary of Provisions and Reserves for NIOS Class 10 Accountancy. Key concepts, important points, and chapter overview.

50 questions32 flashcards5 concepts

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Overview

Provisions and reserves are two important terms in accountancy, and both involve setting aside amounts from profits. A provision is made for a specific known liability or loss when the exact amount is uncertain, while a reserve is created from profits to strengthen the financial position of the busi

Key Concepts

A provision is an amount set

A provision is an amount set aside out of profits to meet a specific known liability or loss, the exact amount of which cannot be determined with accu

A reserve is the amount set

A reserve is the amount set aside out of profits after charging all expenses and provisions. It is used to strengthen the financial position of the bu

General Reserve is a reserve created

General Reserve is a reserve created without any specific purpose. It is also called Free Reserve and can be used for any future purpose.

Capital Reserve is created out

Capital Reserve is created out of capital profits, not from normal business profits. It cannot be distributed as dividend. It may be used for bonus sh

Secret Reserve is a reserve

Secret Reserve is a reserve that does not appear in the Balance Sheet. It is created by undervaluing assets, overvaluing liabilities, charging capital

Learning Objectives

  • To understand the meaning of provision and reserve
  • To identify why provisions are created
  • To explain the different types of reserves
  • To distinguish between provision and reserve
  • To understand the uses of capital reserve, revenue reserve, reserve fund, and sinking fund

Frequently Asked Questions

What are the important topics in Provisions and Reserves for NIOS Class 10 Accountancy?
Provisions and Reserves covers several key topics that are frequently asked in NIOS Class 10 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 — NIOS Class 10 Accountancy?
Understand the core concepts first, then work through the 50 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.

More resources for Provisions and Reserves

All 17 chapters — NIOS Class 10 Accountancy Chapter Summary

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