Camila manages a used car dealership that allows customers to buy cars for no money down and pay in installments throughout the year. Her company builds in a bad-debts adjustment that is deducted from the accounts receivable balance to present a more realistic view of the payments likely to be received in the future for these cars. The payments the company expects to receive are called

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Accounts receivable usually includes an allowance for bad debts that management does not expect to collect. The bad-debts adjustment is normally based on historical collections experience and is deducted from the accounts receivable balance to represent a more realistic view of the payments likely to be received in the future, called net receivables.

Camila Manages a Used Car Dealership That Allows Customers to Buy