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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following formulas correctly calculates Net Accounts Receivable on the balance sheet?

Accounts Receivable minus Accounts Payable

Accounts Receivable minus Allowance for Doubtful Accounts

Accounts Receivable plus Accounts Payable

Accounts Receivable plus Allowance for Doubtful Accounts

Previous problemNext problem

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 (Allowance for Doubtful Accounts).

Identify the components involved: Accounts Receivable is the total amount owed to the company by customers, while Allowance for Doubtful Accounts is an estimate of the portion of accounts receivable that may not be collected.

Recognize the formula: To calculate Net Accounts Receivable, subtract the Allowance for Doubtful Accounts from the total Accounts Receivable. This adjustment ensures the balance sheet reflects a realistic expectation of collectible receivables.

Eliminate incorrect options: Accounts Payable is a liability and unrelated to the calculation of Net Accounts Receivable. Adding Accounts Payable or Allowance for Doubtful Accounts to Accounts Receivable does not align with the definition of Net Accounts Receivable.

Apply the correct formula: Net Accounts Receivable = Accounts Receivable − Allowance for Doubtful Accounts. This formula ensures the balance sheet accurately represents the expected collectible amount.