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General Accounting Discussions: definition and effects

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  1.  
    • CommentAuthorvalerie
    • CommentTimeMar 13th 2008
     
    I need some help for below question.

    In accounting practice, distinction is drawn between the terms 'accrued expenses' and 'provisions' and between the terms 'liabilities' and 'reserves'. Explain each of the four terms quoted and the effects od each ont he preparation of accounts.

    Thank you...
  2.  
    Accrued expenses are generally short-term and booked with the actual balance owed. Accounts payable, generally track expenses that have been invoiced and are part of operations. Accrued expenses are generally booked knowing that costs have been incurred but not invoiced.

    Provisions are generally booked for contigencies, in which the balance owed can be an estimate.

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