Question

True or False. Under the allowance method, when a company records bad debt expense at the end of the year, it causes the Net Realizable Value of their accounts receivable to increase.

Answer 1

Answer:

False

Explanation:

According to the allowance method

Net realizable value is

= Gross realizable value - allowance for doubtful debts

As if we record the bad debt expense so it would increased the allowance that reduced the balances of the net realizable value of the account receivable

Hence, the given statement is false

And, the same is to be considered