Final answer:
The difference between Accounts Receivable and Allowance for Doubtful Accounts is indeed the net realizable value, which is used to show the true cash value expected from receivables after accounting for potential bad debts.
Step-by-step explanation:
The statement is true: the difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is known as the net realizable value. This concept is fundamental in accounting as it helps present a more accurate value of accounts receivable by accounting for the potential bad debts that may not be collectible. The net realizable value is important for users of financial statements since it reflects the expected cash inflows from receivables, giving a truer financial picture. The T-account, a fundamental building block in accounting, delineates assets on one side and liabilities, along with net worth, on the other. In a T-account, total assets must always equal total liabilities plus net worth, whether for a bank or any other firm. Moreover, a bank's balance sheet lists cash, loans made by the bank, and U.S. Government Securities as assets, and bank deposits and other amounts owed as liabilities.