Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Net Accounts Receivable: Allowance for Doubtful Accounts

Financial Accounting

7. Receivables and Investments

Net Accounts Receivable: Allowance for Doubtful Accounts

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Multiple Choice

Under the allowance method, how is net accounts receivable calculated on the balance sheet as of December 31?

Accounts Receivable minus Allowance for Doubtful Accounts

Accounts Receivable only, without any adjustment

Accounts Receivable plus Allowance for Doubtful Accounts

Allowance for Doubtful Accounts minus Accounts Receivable

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Verified step by step guidance

Understand the concept of net accounts receivable: Net accounts receivable represents the amount of accounts receivable that a company expects to collect after accounting for potential uncollectible amounts.

Identify the role of the allowance for doubtful accounts: The allowance for doubtful accounts is a contra-asset account that reduces the accounts receivable balance to reflect the estimated uncollectible amounts.

Determine the formula for net accounts receivable: Net accounts receivable is calculated as Accounts Receivable minus Allowance for Doubtful Accounts. This adjustment ensures the balance sheet reflects the realistic collectible amount.

Analyze the options provided: Evaluate each option to determine which aligns with the formula for net accounts receivable. For example, 'Accounts Receivable minus Allowance for Doubtful Accounts' matches the correct calculation method.

Apply the formula to the balance sheet: On the balance sheet as of December 31, subtract the Allowance for Doubtful Accounts from the Accounts Receivable to calculate the net accounts receivable.