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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

The dollar difference between Accounts Receivable and Allowance for Doubtful Accounts is called

  1. (a) book value.
  2. (b) interest value.
  3. (c) carrying value.
  4. (d) net realizable value.

To determine

Find the correct option that indicates the dollar difference between accounts receivable and allowance for doubtful accounts.

Explanation

Justification for incorrect answers:

  • Option (a) is incorrect because book value is the amount of acquisition cost of asset, less accumulated depreciation as on a particular date
  • Option (b) is incorrect because interest is defined as a charge that is levied on the borrowed money set by the lender to be paid by the borrower for borrowing money.
  • Option (c) is incorrect because carrying value is the face amount of bond, less unamortized discount, or plus unamortized premium.

Justification for correct answers:

Net realizable value: Net realizable value is the net amount of receivables which a business expects to collect from its debtors...

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