The Difference Between Provisions and Reserves Can Best Be Characterized

Multiple Choice

The difference between provisions and reserves can best be characterized as:

A) Provisions are liabilities recognized by charges against profit whereas a reserve is an element of shareholders' equity
B) Provisions are an element of shareholders' equity whereas a reserve is a liability recognized by charges against profit
C) Provisions reduce assets to net realizable value whereas reserves are liabilities recognized by charges against profit
D) Reserves always reduce profits