All accrued expenses have already been incurred but are not yet paid. By contrast, provisions are allocated toward probable, but not certain, future obligations.

A Provision is an amount that is set aside to cover a probable future expense. Note the word "probable" because these expenses have not been incurred yet. Accruals, on the other hand, refer to the recognition of expenses and revenue that have been incurred and not yet paid.

Accruals involve recording of expenses that have been incurred but payment for which is yet to be made by the transacting entity. Provision involves recording of expenses or losses that have not yet been incurred but they may be incurred on the occurrence or non-occurrence of certain events.

Organizations use provisions to prepare for future contingencies by setting aside a specific amount of money. In some cases, however, the money may be insufficient for the unforeseen event. Accruals, on the other hand, can be for either expenses or revenues, whereas provisions are always for expenses.