es the most accurate estimate of the net realizable value of the receivables. The reason for it is that net realizable value is the net amount of receivables that an enterprise expects to receive from its debtors. Net realizable value is the balance of accounts receivable more than the provision for doubtful debts. The provision for doubtful accounts is a contra account
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Which of the two methods of estimating uncollectible provides for the most accurate estimate of the current net realizable value of the receivables
Analysis of receivables method provides the most accurate estimate of the net realizable value of the receivables. The reason for it is that net realizable value is the net amount of receivables that an enterprise expects to receive from its debtors. Net realizable value is the balance of accounts receivable more than the provision for doubtful debts.
The provision for doubtful accounts is a contra account to accounts receivable, thus reducing accounts receivables. if any account receivable collected after write off of 10000, then
Allowance for doubtful A/c Dr. 10000
To
The direct write-off method provides the correct results because it is write off based on current account receivables, which are not collected at the year-end.
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