WAEC Accounting 2022 Objective — Question 16

Question 16 of 50 from the West African Examinations Council (WAEC) Accounting 2022 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

An increase in the provision for doubtful debts is an additional expense charged to the profit and loss account, which reduces net profit (gross profit is unaffected since provision for doubtful debts is not a trading account item).

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