Accounts receivable are reflected on the statement of financial position at the carrying amount which is
A) accounts receivable plus allowance for doubtful accounts.
B) accounts receivable less allowance for doubtful accounts.
C) accounts receivable plus bad debt expense.
D) accounts receivable less bad debt expense.

Question

Quizplus · Accepted Answer

Accounts receivable are reported net of the allowance for doubtful accounts, which represents the estimated amount of uncollectible accounts. Therefore, the carrying amount of accounts receivable is equal to the gross amount of accounts receivable less the allowance for doubtful accounts. Option B reflects this accurately. Option A adds the allowance for doubtful accounts to accounts receivable, which would overstate the carrying amount. Option C adds bad debt expense to accounts receivable, which is not applicable in determining the carrying amount. Option D subtracts bad debt expense from accounts receivable, which is incorrect since bad debt expense is an expense account and is not directly related to the carrying amount of accounts receivable.

Accounts Receivable Are Reflected on the Statement of Financial Position