Treatment of provision and journal entry

Question

Accepted Answer

Provision is an estimated expense recorded in the financial statements, while journal entry is the actual entry made to record the provision.

Provision is made for anticipated expenses that have not yet been incurred but are likely to occur in the future.
Journal entry is the actual accounting entry made to record the provision in the financial statements.
Provision is usually based on estimates and requires judgment by management.
Journal entry debits the expense account and credits the provision account.
Example: Provision for bad debts is made based on historical data and economic conditions, while the journal entry records the specific amount as an expense in the financial statements.

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