The balance sheet presentation of accounts receivable net of the allowance for doubtful accounts has the effect of stating accounts receivable at:
A) original cost.
B) net realizable value.
C) market value.
D)lower of cost or market.

Question

Quizplus · Accepted Answer

By presenting accounts receivable net of the allowance for doubtful accounts, it reflects the amount the company actually expects to receive from its customers (net realizable value), rather than the original cost or market value. This is the most conservative approach, as it reflects a more accurate estimate of the amount the company is likely to collect. The choice of "lower of cost or market" is not relevant as it applies to inventory valuation, not accounts receivable.

The Balance Sheet Presentation of Accounts Receivable Net of the Allowance