Distinguish between Reserves and Provisions on the basis of Nature, Purpose, and Investment.

Q19. Distinguish between Reserves and Provisions on the basis of:

• a) Nature:

  • Reserves: Created by appropriating profits. They represent accumulated undistributed profits set aside for general or specific future purposes, not to meet any known liability or diminution in asset value.
  • Provisions: Created by charging profits. They are amounts set aside to meet a known liability or a known reduction in the value of an asset, the exact amount of which cannot be determined with certainty.

• b) Purpose:

  • Reserves: To strengthen the financial position of the business, meet unforeseen contingencies, finance expansion plans, or equalize dividends.
  • Provisions: To provide for specific liabilities or losses that are certain to occur but whose amount is uncertain, such as provision for doubtful debts, provision for depreciation, or provision for taxation.

• c) Investment:

  • Reserves: Can be invested outside the business in marketable securities, forming a "Reserve Fund."
  • Provisions: Cannot be invested outside the business. The funds are typically retained within the business to meet the specific obligation for which the provision was made.

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Q20. Explain any three objectives of accounting.

1. Maintaining Systematic Records: Accounting aims to record all financial transactions in a systematic and organized manner, ensuring that complete and accurate data is available for future reference and analysis.
2. Ascertaining Profit or Loss: A primary objective is to determine the net profit earned or loss incurred by the business during a specific accounting period by preparing a Profit and Loss Account.
3. Ascertaining Financial Position: Accounting provides information about the financial health of the business at a particular point in time by preparing a Balance Sheet, which shows assets, liabilities, and owner's equity.

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Q21. Prepare Sales Book of M/s. Gyan & Bros. of furniture:

$$\textbf{Sales Book of M/s. Gyan \& Bros.}$$ $$\begin{array}{|l|l|l|r|r|} \hline \textbf{Date} & \textbf{Particulars (Name of Customer)} & \textbf{L.F.} & \textbf{Details (Rs.)} & \textbf{Sales (Rs.)} \\ \hline \text{2025 Jan. 5} & \text{Hari \& Co., Kolkata} & & & \\ & \text{10 Tables @ Rs. 1,100 each} & & 11,000 & \\ & \text{5 Chairs @ Rs. 1,000 each} & & 5,000 & \\ & \text{Total} & & 16,000 & \\ & \text{Less: Trade Discount @ 5\%} & & 800 & 15,200 \\ \text{Jan. 10} & \text{M/s. Sharma \& Co., Delhi} & & & \\ & \text{5 Almirahs @ Rs. 5,000 each} & & 25,000 & \\ & \text{10 Stools @ Rs. 1,000 each} & & 10,000 & \\ & \text{Total} & & 35,000 & 35,000 \\ \hline & \textbf{Total} & & & \textbf{50,200} \\ \hline \end{array}$$