Provisions are liabilities where the business is uncertain as to the amount or timing of the expected future costs. For example, if a business is subject to a law suit, it may provide now for the expected liability on loss of the law suit. This is an example of the prudence concept. (See also liabilities)


reference: Business Studies / Accounting. Accounts & Finance Glossary. Jim Riley BA(Hons) MBA FCA // tutor2u