Accrual Vs Provisions

IN THE MERCANTILE SYSTEM OF ACCOUNTING ALL INCOMES ARE ACCOUNTED FOR ON ACCRUAL BASIS. IT MEANS ALTHOUGH THE INCOME HAS NOT BEEN RECEIVED IT WILL BE RECORDED IN THE BOOKS OF ACCOUNT FOR THE SIMPLE REASON THAT IT HAS BECOME DUE. SIMILARLY ALL EXPENSES WHICH HAVE BEEN INCURED ARE PROVIDED IRRESPECTIVE OF THE FACT THAT THE SAME HAVE NOT BEEN PAID ON THE DATE OF PREPAIRING THE FINAL ACCOUNT. THUS THE WORD ACCRUAL IS USED IN RESPECT OF INCOMES AND WORD PROVISION IS USED IN RESPECT OF EXPENSES INCURED BUT NOT PAID TILL FINALISATION OF ACCOUNTS.

DEEPAK THUKRAL
CHANDIGARH

HI ALL

ACCRUAL IS ARISED AND EXACT FIGER OF AMOUNT IS KNOW FOR THE COMPANY

BUT SOME TIMES BASED ON LAST MONTH OR YEARS EXPNSES TAKEN IN TO CONDERATION AND SET ASIDE CERTAIN AMOUNT IS CALLED PROVISION

Provisions are liabilities of uncertain timings or amount.
Accurals,in contrast, are liabilities to pay for goods or services that have been received or supplied but not have been paid or formally agreed with the suppliers

Acuurals are often considered as part of trade and other payables whereas provisions are reported separately