How Do Firms Report Accounts Receivable

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The Answer is ACCOUNTS RECEIVABLE

Firms report accounts receivable they expect to collect within one year at the amount of cash the firms expect to receive.This amount may differ from the gross amount receivable from customers because of estimated uncollectible accounts.Both U.S.GAAP and IFRS require firms with significant uncollectible accounts receivable to estimate the amount of uncollectible accounts related to a particular period's sales and recognize that amount as bad debt expense in the same period as the related revenues.Firms typically use a contra account to accounts receivable, such as Allowance for Uncollectibles, to reflect the amount of accounts receivable they do not expect to collect.The entry to recognize estimated uncollectible amounts involves a debit to Bad Debt Expense and a credit to Allowance for Uncollectibles.The write-off of a particular customer's account that becomes uncollectible involves a debit to Allowance for Uncollectibles and a credit to Accounts Receivable.Common terminology refers to this accounting as the allowance method.

How Do Firms Report Accounts Receivable

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