Which statement is true about reporting receivables on the balance sheet?

A) Bad Debts Expense is subtracted from Accounts Receivable and is then shown as a deduction from Accounts Receivable on the balance sheet.

B) Bad Debts Expense is is shown as a deduction from Accounts Receivable on the balance sheet.

C) Bad Debts Expense and Allowance for Doubtful Accounts are shown as a deduction from Accounts Receivable on the balance sheet.

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

Question

Business

Nolan Orozco

31 May, 15:33

Which statement is true about reporting receivables on the balance sheet?

A) Bad Debts Expense is subtracted from Accounts Receivable and is then shown as a deduction from Accounts Receivable on the balance sheet.

B) Bad Debts Expense is is shown as a deduction from Accounts Receivable on the balance sheet.

C) Bad Debts Expense and Allowance for Doubtful Accounts are shown as a deduction from Accounts Receivable on the balance sheet.

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

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Answers (1)

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Steven Woods · Answer 1

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

Explanation: Balance sheet is a statement of account that shows the number of assets, liabilities, capital and net profit or loss in an organisation. Receivables refers to the amount that the seller ios owed by the customers or buyers. Therefore, receivables are current assets in a business and are listed on the left side of the balance sheet. Allowance for doubtful accounts is listed as a deduction below the accounts receivable as it is a reduction of the total amounts on accounts receivable.