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A decrease in the provision for bad and doubtful debts results in____
- a)Increase in Net Profit
- b)Increase in Equity
- c)Decrease in Net profit
- d)Both (a) & (b)
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
A decrease in the provision for bad anddoubtful debts results in____a)...
As what we kept as a provision if any chance of bad debts comes, had decreased ...then our net profit will rise...Not only that our profit is our equity as owner's equity is capital....
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A decrease in the provision for bad anddoubtful debts results in____a)...
As we create provision for bad and doubtful out of net profit and if provision is decreased then there is increase in net profit. Morevere we add net profit in equity so if net profit is increased then equity is also incresed.
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