Which of the following is true about the presentation of receivables?
A)Companies must report gross accounts receivable on the statement of financial position.
B)Companies must report the net realizable value of accounts receivable on the statement of financial position.
C)Bad debt expense must be reported under non-operating expenses in the income statement.
D)The allowance for doubtful accounts must be reported in the liabilities section of the statement of financial position.

Question

Quizplus · Accepted Answer

Companies must report the net realizable value of accounts receivable on the statement of financial position. This means that they must deduct the estimated amount of uncollectible accounts from the gross accounts receivable. The allowance for doubtful accounts, which represents the estimated amount of uncollectible accounts, is reported as a contra-asset account in the assets section of the statement of financial position. Bad debt expense is reported as an operating expense on the income statement.

Which of the Following Is True About the Presentation of Receivables