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Which of the following activities will increase profits?

Accounts - Principles of Accounts
WAEC 2018

Which of the following activities will increase profits?

  • A. depreciation charges
  • B. reduction in provision for doubtful debts
  • C. undervalued closing stock
  • D. returns inwards
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Correct Answer: Option B
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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Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
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WAEC and NECO CBT Software for Computers and Laptops - Candidates, Schools, Centres, Resellers - 100% Offline -Download Now
WAEC and NECO CBT Software for Computers and Laptops - Candidates, Schools, Centres, Resellers - 100% Offline -Download Now
WAEC and NECO CBT App for Mobile Devices - Candidates, Schools, Centres, Resellers - 100% Offline -Download Now
Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
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