Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 43 - No. 24)
If a business decides to *reduce* its provision for doubtful debts, which of the following statements is correct?
The value of trade receivables will increase, and profit will decrease.
The value of trade receivables will increase, and profit will increase.
The value of trade receivables will decrease, and profit will increase.
The value of trade receivables will decrease, and profit will decrease.
Explanation
A reduction in the provision for doubtful debts increases the value of trade receivables and increases profit.
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