passwella.
Menu

WAEC Financial Accounting 2008 Question 6

Question 6

Bad Debts and Provisions

Which of the following is the effect of an increase in the provision for discount allowed?

  1. A.Increase in net profit
  2. B.Decrease in gross profit
  3. C.Decrease in net profit
  4. D.Increase in gross profit.
Show the answer and explanation

Answer: C (Decrease in net profit)

Explanation

An increase in a provision is charged to profit and loss, lowering net profit.