Difference between provision and accrual

Question

Accepted Answer

Provision is an estimated liability while accrual is a recognized expense.

Provision is an estimated liability that is recognized when there is uncertainty about the amount or timing of a future expense.
Accrual is a recognized expense that is recorded when it is incurred, regardless of when the payment is made.
Provisions are made for potential future expenses, such as legal claims or warranty obligations.
Accruals are made for expenses that have been incurred but not yet paid, such as salaries or interest.
Provisions are based on estimates and are adjusted over time as more information becomes available.
Accruals are based on actual transactions and are reversed when the payment is made.
Provision is a balance sheet item, while accrual is an income statement item.

Accepted Answer

All accrued expenses have already been incurred but are not yet paid. By contrast, provisions are allocated toward probable, but not certain, future obligations.

Difference between provision and accrual

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