Homework Help is Here – Start Your Trial Now!
Business
Accounting
PROVIS A provision is an existing liability of uncertain timing uncertain amount. The essence of a provision is that there is uncertainty abot the timing or amount of the future expenditure. It is this uncertainty that distinguishes provision from othe liabilities. The liability definitely exists at the end of reporting perion but the amount is indefinite or the date when the obligation is due is also indefinite, and in some cases, the payee canno be identified or determined. Actually, a provision may be the equivalent of an estimatec liability or a loss contingency that is accrued because it is both probahle and measurable

PROVIS A provision is an existing liability of uncertain timing uncertain amount. The essence of a provision is that there is uncertainty abot the timing or amount of the future expenditure. It is this uncertainty that distinguishes provision from othe liabilities. The liability definitely exists at the end of reporting perion but the amount is indefinite or the date when the obligation is due is also indefinite, and in some cases, the payee canno be identified or determined. Actually, a provision may be the equivalent of an estimatec liability or a loss contingency that is accrued because it is both probahle and measurable

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Explain this in simpler terms (easier to understand).
PROVISION A provision is an existing liability of uncertain timing or uncertain amount. The essence of a provision is that there is uncertainty about the timing or amount of the future expenditure. It is this uncertainty that distinguishes provision from other liabilities. The liability definitely exists at the end of reporting period but the amount is indefinite or the date when the obligation is due is also indefinite, and in some cases, the payee cannot be identified or determined. Actually, a provision may be the equivalent of an estimated liability or a loss contingency that is accrued because it is both probable and measurable.
Transcribed Image Text:PROVISION A provision is an existing liability of uncertain timing or uncertain amount. The essence of a provision is that there is uncertainty about the timing or amount of the future expenditure. It is this uncertainty that distinguishes provision from other liabilities. The liability definitely exists at the end of reporting period but the amount is indefinite or the date when the obligation is due is also indefinite, and in some cases, the payee cannot be identified or determined. Actually, a provision may be the equivalent of an estimated liability or a loss contingency that is accrued because it is both probable and measurable.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS