There is a direct correlation of profit loss in business with provision of preservation. The financial statement of the business is prepared every year at a particular time. On the date on which the accounting statement is prepared, some issues remain uncertain. There may be some costs that will need to be paid in the near future, but the time or quantity of payment is not guaranteed right now. For example, a profit bonus will be given to the employees of a portion of net profits of the year 31 December 2017. It will be 5% of the net profit or 7% will be fixed later. In this case, profit bonus protection is preserved. Provisioning means that the expenditure will be made in the future, showing the amount of profit (right) shown in the cost of this year, so that the future cost should not be reduced to the extent of profit.
Provisioning is a program of modern accounting where some part of the profit is removed so that any liability that will be spent on future money or resources is paid. The institution can not figure out the exact amount or the exact duration of the future or the amount of time spent on it, but the institution will be fair about the cost.
For example, provision is made for income tax. The institution knows that after a few days income tax is to be given, it is not yet certain how much to pay, as the tax or tax sector may change. Banks have made provisions based on loan classification. The institution knows that it can not be possible to recover some debts, but it is not possible to ensure that the amount of debt will be unrealized. Since the bank will face losses in the future if the debt is not inadequate, it is showing low interest rates this year by showing that the loans will be unpredictable so that in the future the profits will not be reduced very much. The customer's compensation case against the organization is ongoing. With the possibility of losing the organization in the case, the provision will be preserved by showing this as the cost of financing this year so that the profits of the business will not suddenly get reduced in the future when paying the customer.
If the provision of this year is more than last year's provisional provision, the cost of this year will increase (profit will decrease). Likewise, if the provision of this year is less than last year's provisional provision, the cost of this year will be reduced or the profit will increase. Therefore, it is possible to make profit smoothing more than the amount of probation. In 1998, the International Accounting Standards Organization (IAB) published the calculation standard for provisioning which has been followed by most of the world including Bangladesh since 1999.
In accordance with international accounting standards, three conditions must be met for preservation. 1st Condition: There is no liability for any of the events in the past. Behavioral liability will mean liability which is not legally bound to be done by the institution, but it is practiced according to the rules of the long run, such as profit bonus payment. Provision can not be saved for any work that will happen in the future. For example, a buyer will be selling the goods in the balance, which he can not pay; Provision can not be saved in this case. 2nd condition: It is fairly sure that the event will cost some of the organization. If the customer is sued against the organization, then the provision can not be saved until the matter is fully confirmed that the institution will lose the case. 3rd condition: In any event, the cost of the organization can be easily estimated.
Provision can not be saved in some cases below-
1. The provision of this year will not be preserved for the loss of the organization in the next year. As the incident happens in the future, the 1st condition has been violated.
2. The machinery will be repaired for the next year so that the provision can not be saved this year. Because the company is not legally obliged to repair the machine (1st condition).
3. The government has sued the organization to harm the environment. The provision can not be preserved because of not having the right hold on how much compensation can be made. (Anwar Parvez, ACCA)
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The spectacular results have shown that Ecommerce is now the main income source of many people who have earned millions of dollars. And if you already have an online business, no matter what it is… or even if you are running with another method of ecommerce currently, you can simply run this alongside it simultaneously. If you run an eCommerce business that sources products from China or other overseas countries, you’ll know first-hand that dealing with people over there can sometimes be difficult. The system really is that simple – and the reality is that you only need a small number of successful products to start making really amazing money. In the next few minutes, we’re going to give you a sneak-peak at a system that involves selling products online, but not in a way that you would have likely seen before. Aidan and Steve discovered a way to drastically reduce your site advertising expenses.
If you’re in a tight financial situation this might not be the right fit as you need an additional budget for ads to really make this thing work. If you want to build a business around your identity, that’s not this program. Kibo Eclipse is a flagship program and with how many people Steve Clayton and Aidan Booth have turned into millionaires, this cost is quite reasonable. There is only one Kibo Eclipse discount – if you buy the program this year you can get the program in 2023 for half price.
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