The Practice of Reporting the Net Realizable Value of Receivables

question 49

Multiple Choice

The practice of reporting the net realizable value of receivables in the financial statements is commonly called:

• A) the cash flow method of accounting for uncollectible accounts.
• B) the direct write-off method of accounting for uncollectible accounts.
• C) the allowance method of accounting for uncollectible accounts.
• D) Both A and B are correct.

---

Definitions:

Prediction

The act of making statements or claims about events that will happen in the future based on past and present information or data.

Normal Curve

A symmetrical, bell-shaped curve that describes the distribution of many types of data where most of the observations cluster around the mean.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how much the values differ from the mean of the set.

Scatterplot

A graphed cluster of dots, each of which represents the values of two variables. The slope of the points suggests the direction of the relationship between the two variables. The amount of scatter suggests the strength of the correlation (little scatter indicates high correlation).