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Problem 1: A company has a provision for warranty claims b/f of $70,000. It does a review and decides that the provision needed in future should be $55,000. What is the effect on the financial statements?
Statement of profit or loss Statement of financial position
A Increase expenses by $15,000 Provision $70,000
B Increase expenses by $15,000 Provision $55,000
C Decrease expenses by $15,000 Provision $70,000
D Decrease expenses by $15,000 Provision $55,000
Financial Statement Analysis and Preparation
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