Provisions can result in a higher or lower than expected income or lower than expected loss. One must be careful not to overstate an event that has not occured but may be likely.



  • Bad debts
  • Guarantees
  • Losses
  • Pension
  • Severence Costs
  • Restructuring Costs
  • Employees not taking Holiday Time
  • Damage to Property
  • Liability Costs

*If income taxes were not calculatable, one could create a provision account, however, they can be calculated with reasonable accuracy, therefore, it is setup as a liability instead.