Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 7 - Cash and Receivables - Review and Practice - Questions - Page 362: 6


Two methods of recording accounts receivable are: 1. Record receivables and sales net. 2. Record receivables and sales gross.

Work Step by Step

The receivable and sales net method is desirable since it values receivable items at the net realizable value. Moreover, this method provides a better figure of revenue earned. The gross method for receivables and sales is used in practice normally because it is expedient and its use does not generally have any significant effect on the presentation of the financial statements.
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