Find what is the effect on the financial statements

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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

Reference no: EM132761362

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