DK Goel Solutions Class 11 Chapter 17 Provisions and Reserves

1. DK Goel Solutions Class 11 Chapter 17 Provisions and Reserves DK Goel Accountancy Class 11 Solutions Chapter 17 Provisions and Reserves, which is laid out by master Accountancy instructors from the most recent form of DK Goel Class 11 Accountancy books. We, at Dk Goel Solutions help students to fathom every one of the hypotheses, specifically. There are various ideas in Accountancy, however the ideas of Trial Balance, Depreciation and Bank Reconciliation Statement (BRS) are required. DK Goel Solutions Class 11 – Chapter 17 Short Answer Questions of DK Goel Solutions Class 11 Chapter 17 Question 1: Define provision. What is the important of creating a provision? (any three points of importance). Solution 1: The word 'Provision' applies to any of the following numbers, according to the Companies Act:

2. (i) The balance written down or deferred in order to pay for the depletion, renewal or reduction in the valuation of the properties. (ii) The amount excluded by means of provision of any known duty for which the amount cannot be calculated with substantial precision. Below is the value of the provision:- 1.) To ascertain the company's actual net profit. 2.) To ascertain the company's real financial status. 3.) In the future, to provide for known losses. Question 2: Give any four points of distinction between Provisions and Reserves. Solution 2: Provision Reserve To satisfy a known obligation, it is formed. It is designed to full-fill an unknown duty. It is created to compensate for a particular loss and should thus only be used to satisfy the loss. It is not meant to provide for a single malfunction, but it should, for whatever purpose, be used. It is developed by P&L a/c debiting. Therefore, it is difficult to determine net benefit until all conditions have been debited to P&L a/c. It is created not by debiting P&L A/c but by appropriation A/c of P&L. As such, after the net profit calculation, it is made. It is either seen on the side of assets by means of deduction from the asset for which it is generated or on the side of liabilities as a separate object. It is shown on the liabilities side under the head ‘Reserves and Surplus’. Question 3: Distinguish between Provision and Reserve on the following basis: (i) Basic Nature (ii) Purpose (iii) Effect on Taxable Profits (iv) Presentation in Balance Sheet (v) Element of Compulsion (vi) Use for payment of dividend. Solution 3:

3. Basis of Difference Provision Reserve (i) Basic Nature To satisfy a known obligation, it is formed. It is formed to satisfy an undisclosed liability. (ii) Purpose It is created to compensate for a particular loss and should thus only be used to satisfy the loss. It is not intended to provide for a particular failure, so it can be used for any reason. (iii) Effect on Taxable Profits It is developed by P&L a/c debiting. Therefore, it is difficult to determine net benefit until all conditions have been debited to P&L a/c. It is created not by debiting P&L A/c but by appropriation A/c of P&L. As such, after the net profit calculation, it is made. (iv) Presentatio n in Balance Sheet It is either seen on the side of assets by means of deduction from the asset for which it is generated or on the side of liabilities as a separate object. It is seen under the heading 'Reserves and Surplus' on the hand of liabilities. (v) Element of Compulsion The aim is to pay for depreciation, loans that are uncertain and other particular liabilities. The goal of the reserves is to improve the company's financial status. (vi) Use for payment of dividend. It cannot be used by owners as dividends for shareholders. It may be used by shareholders as dividends for delivery. Question 4: Differentiate between Provision and Reserve on the basis of (i) Appropriation or Charge (ii) Financial Position (iii) Distribution Solution 4: (i) Appropriation or Charge:- Creation of provision is a legal necessity. Provisions have to be provided for even if there are no profits. Thus, provision is charge against profits. Creation of reserves is discretionary. It can be created only if adequate profits have been earned. Thus reserve is an Appropriation of Profit. (ii) Financial Position:- It is either shown on the assets side by way of deduction from the asset for which it is created or as a distinct item on the liabilities side. It is shown on the liabilities side under the head ‘Reserves and Surplus’.

4. (iii) Distribution:- It cannot be utilised for distribution as dividends among shareholders. It can be utilised for distribution as dividends among shareholders. Question 5: Give five examples of Capital Reserve. Solution 5: The five examples of Capital Reserve are:- 1.) Gain from fixed asset transactions. 2.) Benefit from the fixed-asset and liability revolution. 3.) Rates obtained in respect of the issue of shares or debentures. 4.) Profit from the purchases of a company that is going. 5.) Benefit due to a company's incorporation. Question 6: Distinguish between Revenue Reserve and Capital Revenue. Solution 6: Revenue Reserves Capital Reserves This funds are generated from sales profits that result from the company's regular operational operations that are otherwise eligible for dividend payment. This reserves are generated from capital gains and do not result from the company's regular operational operations and are not eligible for dividend payment. Only for the intended purpose may a particular reserve be used, whereas a general reserve can include the payment of dividends to shareholders without any preconditions. These reserves may not usually be used for the payment of dividends to shareholders. Nevertheless, others used to distribute dividends according to compliance with those requirements set down by corporations. Question 7: Explain Capital Reserve and give its any two examples. Solution 7: In addition to the usual earnings, capital gains are received from multiple sources in the sector as well. Capital Reserves are regarded as the reserves generated by those capital gains. The five Capital Reserve examples are below:— 1.) Gain from fixed asset transactions. 2.) Benefit from the fixed-asset and liability revolution.

5. Question 8: Write any three methods of creating secret reserves. Solution 8: It is possible to build secret reserves in the following ways: 1.) Write off unfair depreciation 2.) Charging the Benefit and Loss Account for capital spending (such as adjustment of assets). 3.) Treating a receipt of revenue as a receipt of money (such as rent received credited to Building Account) Very Short Answer Questions of Provisions and Reserves Question 1: What are Provisions? Solution 1: The term 'Provision' applies to the amount written off or retained by paying for depreciation, renewals or reduction in asset value, according to the Companies Act. Question 2: Give two examples of provisions. Solution 2: The examples of provisions are:- 1.) Provision for Depreciation of Assets 2.) Provision for Taxation. Question 3: What are Reserves? Solution 3: To face potential risks, savings mean the balance put aside from benefit and other surpluses. In other words, a reserve is planned for potential execution of some uncertain obligation or failure. Question 4: Give two examples of reserves. Solution 4: The examples of reserves are:- 1.) General Reserve 2.) Capital Reserve Also read - Dk Goel Solutions Class 12

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