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Revision Notes

Provisions and Reserves

NIOS · Class 10 · Accountancy

Quick revision notes for Provisions and Reserves — NIOS Class 10 Accountancy. Key concepts, formulas, and definitions for last-minute revision.

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Key Topics to Revise

1

Meaning and Need

  • 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 accuracy.
  • A provision is also defined legally as any amount written off or retained for depreciation, renewals, diminution in the value of assets, or for a known liability of uncertain amount.
  • A provision is a charge against profits and is debited to the Profit and Loss Account.
2

Types of Reserves

  • General Reserve is created without any specific purpose.
  • General Reserve is also called Free Reserve.
  • General Reserve can be used for any future purpose.
3

Reserve Fund and Sinking Fund

  • A Reserve Fund is a reserve whose amount is actually invested outside the business in securities or other assets.
  • In a General Reserve, the amount stays within the business.
  • In a Reserve Fund, the amount is separately invested outside the business.
4

Accounting Treatment and Differences

  • Provision is debited to the Profit and Loss Account.
  • Reserve is debited to the Profit and Loss Appropriation Account.
  • Provision reduces net profit.

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Full Notes

Key Concepts

A provision is an amount setA reserve is the amount setGeneral Reserve is a reserve createdCapital Reserve is created outSecret Reserve is a reserve

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.

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