The net realizable value of accounts receivable is calculated,
A) Accounts Receivable + Uncollectible Accounts Expense
B) Accounts Receivable + Notes Receivable
C) Accounts Receivable - Allowance for Doubtful Accounts
D) 365/Accounts Receivable

Question

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The net realizable value of accounts receivable is calculated by subtracting the allowance for doubtful accounts from the total accounts receivable. This gives us the estimated amount that the company is expected to collect from its customers. Option A includes the expense of uncollectible accounts, which is not relevant to the calculation of the net realizable value. Option B involves notes receivable, which is a separate item from accounts receivable. Option D calculates the average collection period, which is not relevant to the net realizable value calculation.

The Net Realizable Value of Accounts Receivable Is Calculated