[amp_mcq option1=”Reserve” option2=”Provision” option3=”Liability” option4=”None of these” correct=”option2″]<\/p>\n
The correct answer is: B. Provision<\/strong><\/p>\n A provision is an amount set aside to meet a liability that is not certain to occur or the amount of which cannot be precisely determined. In the case of bad debts, a provision is set aside to cover the possibility that some of the company’s accounts receivable will not be collected.<\/p>\n A reserve is a fund that is set aside for a specific purpose, such as to meet future expenses or to provide for contingencies. Reserves are not liabilities, as they are not obligations to pay out money.<\/p>\n A liability is an obligation to pay out money in the future. Liabilities can arise from contracts, from the purchase of goods or services, or from the operation of a business.<\/p>\n Therefore, the correct answer is B. Provision.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”Reserve” option2=”Provision” option3=”Liability” option4=”None of these” correct=”option2″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-44354","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"\n