Ans. A reserve is an appropriation of the profits for a specific purpose. The reserve is an appropriation of profit for a future needed purpose, while a provision is a charge for an estimated expense that is destined and is known before-hand. The IFRS standard has coined both the terms in the same meaning, but in actual, provision and reserves have different meanings and usage. Reserve is the keeping aside of the profit without any special purpose, while provision is the keeping aside of profit with some real purpose.