What is the net realizable value of accounts receivable?
Understand the Problem
The question is asking for the net realizable value (NRV) of accounts receivable, which refers to the amount of money that a company expects to collect from its outstanding invoices, after accounting for any allowances for doubtful accounts.
Answer
The gross accounts receivable minus the allowance for doubtful accounts.
The final answer is the gross amount of accounts receivable less any allowance for doubtful accounts.
Answer for screen readers
The final answer is the gross amount of accounts receivable less any allowance for doubtful accounts.
More Information
NRV helps provide a realistic estimate of the amount of cash a company expects to collect from its accounts receivable. NRV is fundamental in ensuring that asset valuations are not overestimated.
Tips
A common mistake is not updating the allowance for doubtful accounts regularly, leading to inaccurate NRV calculations.
