Question

Which of the following is classified as a 'provision' and not depreciation?

Options

• Money set aside for future asset replacement

• Amount set aside for possible bad debts

• Asset value falling due to passage of time

• Profits kept for emergencies

Answer 1

Amount set aside for possible bad debts 

Explanation:

Provisions are amounts set aside for expected future liabilities, like bad debts, not for asset value loss.​