Question

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.

Answer 1

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

Step-by-step 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