What is the net realizable value of accounts receivable?
Understand the Problem
The question is asking for the definition or explanation of net realizable value in the context of accounts receivable. It involves determining how much of the accounts receivable will ultimately be collected, considering factors like potential defaults and allowances for doubtful accounts.
Answer
Gross amount of accounts receivable minus allowance for doubtful accounts.
The final answer is the gross amount of accounts receivable minus any allowance for doubtful accounts.
Answer for screen readers
The final answer is the gross amount of accounts receivable minus any allowance for doubtful accounts.
More Information
The net realizable value (NRV) is important as it provides a true valuation of accounts receivable by accounting for potential bad debt losses.
Sources
- What is NRV? - Investopedia - investopedia.com
- Accounts Receivable and Net Realizable Value - Open.lib.umn.edu - open.lib.umn.edu
- Net Realizable Value Formula - Wall Street Prep - wallstreetprep.com
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