WAEC Accounting 2016 Objective — Question 19

Question 19 of 50 from the West African Examinations Council (WAEC) Accounting 2016 Objective paper, with the correct answer and a full explanation.

19. Which of the following would result from an increase in the provision for doubtful debts? A. A decrease in gross profit B. A decrease in net profit C. An increase in gross profit D. AN increase in net profit

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

Explanation

Provision for doubtful debt is an expense to the business. Thus, when it is increased, the expense total increases and this will lead to decrease in net profit. Use the following information to answer questions 20 and 21. Acquisition cost of computers 80,000; Installation cost 20,000; Estimated residual value 4,000; Estimated useful life 5 years

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