An Increase in the Provision for Doubtful Debts Has Been

Multiple Choice

An increase in the provision for doubtful debts has been treated as a decrease in the financial statements. The amount is £4,000. Which of the following explains the resulting effects?

A) Net profit is overstated by £8,000, statement of financial position trade receivables is overstated by £4,000
B) Net profit is overstated by £8,000, statement of financial position trade receivables is overstated by £8,000
C) Net profit is understated by £8,000, statement of financial position trade receivables is understated by £8,000
D) Gross profit is overstated by £8,000, statement of financial position trade receivables is overstated by £8,000