WAEC Book Keeping 2025 Objective — Question 11
Question 11 of 42 from the West African Examinations Council (WAEC) Book Keeping 2025 Objective paper, with the correct answer and a full explanation.
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The effect of a reduction in the provision for doubtful debts is a(n):
- A. Decrease in gross profit
- B. Increase in gross profit
- C. Decrease in net profit
- D. Increase in net profitCorrect
Explanation
A reduction in the provision for doubtful debts is treated as an income (added back) in the profit and loss account, so it increases net profit; it has no effect on gross profit, which is determined in the trading account.
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