Communiquez avec les autres et partagez vos connaissances professionnelles

Inscrivez-vous ou connectez-vous pour rejoindre votre communauté professionnelle.

Suivre

What is the obvious difference between accrued liabilities and provision?

user-image
Question ajoutée par Nadjib RABAHI , Freelancer , My own account
Date de publication: 2016/02/10
SAI ANIMESH KUMAR N
par SAI ANIMESH KUMAR N , Senior Manager, Credit , Ahli United Bank

1. Accruals can be either an asset or a liability. 

2. Provisions relate to approximately expected future losses whereas accruals are sure to impact the cash inflow / outflow.

3. Provisions can be written back if the losses incurred are less compared to the provisions created.

4. Management / Auditor have a choice and opinion about the provision amount to be created but in accruals they cannot deviate from recording it.

 

Abdul Mannan Raj
par Abdul Mannan Raj , Manager Finance & Accounts , Maxcon FZCO

Accruals are made for both receipts and payments, whereas provisions are made only for expected future expenses. Accruals ensure that accounting data is recorded as and when the incomes or expenses are made known, instead of waiting for the funds actually to exchange hands. On the other hand, provisions are recorded when expenses or future losses are expected by a firm as a method for preparing for those expenses through a safety buffer of cash to use, if and when losses are made.

More Questions Like This