If the estimate of bad debt expense is made on the basis of net realizable value of the accounts receivable, the balance of the account, "Allowance for Doubtful Accounts," is adjusted so that the adjusted balance reflects the computed amount needed to value the receivables.

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This statement is true. The allowance for doubtful accounts is adjusted based on the estimate of bad debt expense using the net realizable value of accounts receivable. The purpose is to ensure that the balance reflects the amount needed to value the receivables accurately.

If the Estimate of Bad Debt Expense Is Made on the Basis