Which of the following is the effect of a reduction in the provision for doubtful debts?

The effect of a reduction in the provision for doubtful debts is an increase in net profit. A provision for doubtful debts is an amount set aside to cover potential losses that a company may face if its customers default on their debts. If the provision is reduced, it means that the company believes that it is less likely to experience such losses in the future, and therefore, it can release some of the funds previously set aside for the provision. As a result, the reduction in the provision for doubtful debts will decrease the amount of expense charged against the company's profit, which will increase its net profit. Therefore, the correct option is "increase in net profit."