In preparing a profit and loss account, a decrease in provision for doubtful debts accounts is treated as

Answer Details

In preparing a profit and loss account, a decrease in provision for doubtful debts is treated as income. This is because provision for doubtful debts is a provision made by a business to account for the possibility that some of its customers may not pay their debts. When the business determines that the likelihood of customers not paying their debts has decreased, it can decrease the provision. This decrease represents an increase in the amount of money that the business expects to collect from its customers, and therefore, is treated as income in the profit and loss account.