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

Which of the following best describes 'Net Accounts Receivable' in the context of the Allowance for Doubtful Accounts?

The estimated amount of uncollectible accounts for the period.

The total amount of cash collected from customers during the period.

The total amount of accounts receivable less the allowance for doubtful accounts.

The sum of all outstanding customer invoices before any deductions.

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Verified step by step guidance

Step 1: Understand the concept of 'Net Accounts Receivable'. It represents the amount of accounts receivable that a company expects to collect after accounting for potential uncollectible accounts.

Step 2: Recognize the role of the 'Allowance for Doubtful Accounts'. This is a contra-asset account that reduces the total accounts receivable to reflect the estimated uncollectible portion.

Step 3: Calculate 'Net Accounts Receivable' using the formula:

Net Accounts Receivable = Total Accounts Receivable - Allowance for Doubtful Accounts

Step 4: Note that 'Net Accounts Receivable' is not the total amount of cash collected from customers during the period, nor is it the sum of all outstanding customer invoices before deductions. It specifically accounts for the estimated uncollectible portion.

Step 5: The correct description of 'Net Accounts Receivable' is: 'The total amount of accounts receivable less the allowance for doubtful accounts.' This reflects the realistic expectation of cash inflows from receivables.