Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 6 - No. 31)
What is the effect of a provision on the financial statements?
Increase the value of trade receivables and reduce profit.
Reduce the value of trade receivables and reduce profit.
Increase the value of trade receivables and increase profit.
Reduce the value of trade receivables and increase profit.
Explanation
A provision reduces the amount recorded as an asset for trade receivables, and reduces net profit.
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