Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 42 - No. 49)
Which of the following best describes the 'net realizable value' of accounts receivable?
The total amount of outstanding invoices.
The total amount of cash the company expects to collect from its customers.
The amount of receivables before considering the provision for doubtful debts.
The difference between the outstanding invoices and the provision for doubtful debts.
Explanation
Net realizable value is calculated by subtracting the allowance for doubtful accounts from gross receivables.
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