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WAEC Financial Accounting 2019 Question 32

Question 32

Depreciation

An effect of increase in the provision for depreciation is

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

Answer: D (decrease in net profit.)

Explanation

More depreciation is a bigger expense in profit and loss, so net profit falls.