Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Financial Statements of a Company

Question:
What is the name of the amount that is set aside to meet losses due to bad debts?
Options:
Reserve
Provision
Liability
None of these
Correct Answer:
Provision
Explanation:
Provisions in accounting refer to the amount that is generally put aside from the profit in order to meet a probable future expense or a reduction in the asset value although the exact amount is unknown.