A provision differs from other liabilities in that there is greater uncertainty about the timing and amount of settlement.

Question

Quizplus · Accepted Answer

A provision is a liability that is uncertain in terms of timing and amount of settlement. This is because the company may not know the exact amount that will be required to settle the liability, or when the liability will need to be settled. In contrast, other liabilities such as accounts payable or long-term debt have more certainty in terms of timing and amount of settlement.

A Provision Differs from Other Liabilities in That There Is