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WAEC Financial Accounting 2015 Question 22

Question 22

Bad Debts and Provisions

In preparing a profit and loss account, a decrease in provision for doubtful debts accounts is treated as

  1. A.current liability.
  2. B.expenses.
  3. C.income.
  4. D.current asset.
Show the answer and explanation

Answer: C (income.)

Explanation

Reducing the provision releases part of an earlier charge, so it is credited to profit and loss as a gain (income).