What does the term "net realizable value" mean with regard to the accounts receivable account?
A) The gross amounts owed by customers for credit purchases.
B) Total accounts receivable plus an amount estimated for bad debts.
C) The allowance for doubtful accounts less bad debt expense.
D) Actual amounts of accounts receivable less an allowance for doubtful accounts.

Question

Quizplus · Accepted Answer

Net realizable value refers to the actual amounts of accounts receivable less an allowance for doubtful accounts, representing the amount of receivables that the company expects to collect from customers. This calculation takes into account the possibility of some customers defaulting on their payments, which is reflected in the allowance for doubtful accounts.

What Does the Term "Net Realizable Value" Mean with Regard