The Companies Act 71 of 2008 draws a distinction between provisions and reserves, and between distributable and non-distributable reserves.

You are required to:

1. Define the terms ‘provision’, ‘reserve’, ‘distributable reserve’ and ‘non-distributable reserve’.

2. Comment briefly on the disclosure, and significance, of the distinction between a provision and a reserve in:

a. Determining profit.

b. Disclosing such items on the statement of financial position.