WAEC - Accounts Principles Of Accounts (2018 - No. 17)
Which of the following activities will increase profits?
depreciation charges
reduction in provision for doubtful debts
undervalued closing stock
returns inwards
Explanation
The provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivable (credit sales) that have been issued but not yet collected.
If a business estimated 20,000 as bad debts, a reduction to a lesser amount means the business will make more money from sales, which amounts to higher profits.
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