Question

The net realizable value of accounts receivable is equal to:

A) gross accounts receivable less allowance for uncollectible accounts.
B) gross accounts receivable less bad debt expense.
C) gross accounts receivable less returns and allowances.
D) gross accounts receivable less sales discounts.

Answer 1

The net realizable value of accounts receivable is equal to gross accounts receivable less allowance for uncollectible accounts.

Step-by-step explanation:

The net realizable value of accounts receivable is equal to gross accounts receivable less allowance for uncollectible accounts.

The net realizable value represents the estimated amount of accounts receivable that a company expects to collect from its customers. It is calculated by subtracting the amount of the allowance for uncollectible accounts from the gross accounts receivable. The allowance for uncollectible accounts is the estimated amount of accounts receivable that is not expected to be collected due to customer defaults or non-payment.