Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 36 - No. 48)
A company overstates the provision for doubtful debts. What is the effect of this error?
Understates net income.
Understates total assets.
Overstates total liabilities.
Overstates expenses.
Explanation
Overstating the provision results in a lower net income, lower net assets, and overstates expenses.
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