A provision is a _____ of profit.
ADistribution
BAllocation
CCharge
DTransfer
Answer:
C. Charge
Read Explanation:
A provision is an amount set aside to meet a known liability or anticipated loss, the amount of which cannot be determined with certainty.
It is deducted before arriving at the net profit, i.e., it is a charge against profit, not an appropriation.
Examples of Provisions (Charge Against Profit):
Provision for doubtful debts
Provision for depreciation
Provision for taxation (if made before determining net profit)
Appropriation of Profit means:
Distribution of net profit after all provisions and expenses have been charged.
Examples:
Transfer to general reserve
Proposed dividends