Multiple choice

To meet a known liability or contingency, if the amount is uncertain,

  1. reserves are created

  2. provisions are created

  3. investments are made

  4. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 The provisions are created for it. For ex; the provision of doubtful debts is not certain, as in,  how much the debtor would not be able to pay, but it is a contingency that some amount may not be paid by the debtors. So, a provision for doubtful debts is made.

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