Which of the following is the effect on net income if a business decreases its provision for bad debts?
A. It will increase net income
B. It will decrease net income
C. No effect
D. It will increase gross profit and net income
Answer: Option A
Solution(By Examveda Team)
Net income will increase is the effect on net income if a business decreases its provision for bad debts.This Question Belongs to Commerce >> Accounting
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Accounting provides information on
A. Cost and income for managers
B. Company's tax liability for a particular year
C. Financial conditions of an institutions
D. All of the above
The long term assets that have no physical existence but are rights that have value is known as
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Patents, Copyrights and Trademarks are
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Provision for bad debt is expense, expenses charged on debit side of profit and loss account which decrease the net income. If there is decrease in provision means earlier provision is higher than now so which we book earlier as expense now we have to book it as revenue in profit and loss account so It will increase net income.
How?