Regarding accounts receivable and an allowance for uncollectible accounts, which of the following statements is false?...

Regarding accounts receivable and an allowance for uncollectible accounts, which of the following statements is false?

Group of answer choices

Net realizable value equals the sales price of an item less reasonable further costs to both make the item ready to sell and to sell it.

An aging of accounts receivable is a determination of how long each receivable has been on the books.

The net realizable value of accounts receivable is decreased when a bad debt is written off.

Receivables that result from transactions other than trade receivables, if material, are to be separately disclosed on the balance sheet.

Solutions

Expert Solution

Answer: The net realizable value of accounts receivable is decreased when a bad debt is written off.

Explanation:

The net realizable value of accounts receivable is:

Accounts receivable xxxxx

Less: Allowance for uncollectible accounts xxxxx

Accounts receivable [net] xxxxx

When an accounts receivable is written off, the debit is to allowance account and the credit is to the accounts receivable account. As the balance in both the accounts. namely 'accounts receivable' and 'allowance for uncollectible accouts' get reduced by the same amount, the net realizable value does not change when a receivable is written off.

ekkarill92 answered 1 month ago

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