NABTEB Accounting 2020 Objective — Question 16

Question 16 of 50 from the National Business and Technical Examinations Board (NABTEB) Accounting 2020 Objective paper, with the correct answer and a full explanation.

An increase in provision for doubtful debts would result in

A. decrease in gross profit
B. increase in gross profit
C. decrease in net profitCorrect
D. increase in net profit

Explanation

Provision for doubtful debts is charged to the profit and loss account as an expense, so an increase reduces net profit (gross profit is unaffected).

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