Net realizable value of receivables is gross receivables minus
A)bad debt expense and sales returns.
B)bad debt expense and estimated returns and allowances.
C)estimated uncollectibles,and estimated returns and allowances.
D)proven uncollectibles and estimated returns and allowances.

Question

Quizplus · Accepted Answer

Net realizable value of receivables is the estimated amount of cash that will be collected from customers after accounting for estimated uncollectibles and estimated returns and allowances. Therefore, option C, which includes both estimated uncollectibles and estimated returns and allowances, is the best choice. Options A and B include bad debt expense, which is an expense account and not a reduction in the value of the receivables. Option D includes proven uncollectibles, which have already been written off and cannot be included in the net realizable value.

Net Realizable Value of Receivables Is Gross Receivables Minus