Which statement is true about reporting receivables on the balance sheet? Bad Debts Expense is subtracted from Accounts Receivable and is then shown as a deduction from Accounts Receivable on the balance sheet. Bad Debts Expense is is shown as a deduction from Accounts Receivable on the balance sheet.

Question

Azul Galvan

Business

17 March, 05:26

Which statement is true about reporting receivables on the balance sheet? Bad Debts Expense is subtracted from Accounts Receivable and is then shown as a deduction from Accounts Receivable on the balance sheet. Bad Debts Expense is is shown as a deduction from Accounts Receivable on the balance sheet.

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Answers (1)

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Joe Skinner · Answer 1

Allowance for Doubtful Accounts is shown as a deduction from Accounts Receivable on the balance sheet.

Explanation:

Allowance for Doubtful Accounts is deducted from the receivable balance on the balance sheet and shown as a deduction. As this is an contra account receivable account, which has a negative balance according to the account receivables balance. The value reported on the balance sheet is net of Allowance for Doubtful Account balance