Discuss the importance of reporting net accounts receivable. ...

[dakota nelson]

Discuss the importance of reporting net accounts receivable.
 
  What will be an ideal response?

Question 2

Stevens Company started the year with an inventory cost of 145,000 . During the month of January, Stevenspurchased inventory that cost 53,000 . January sales totaled 140,000 . Estimated gross profit is 35. Theestimated ending inventory as of January 31 is
 a. 58,000
  b. 91,000
  c. 107,000
  d. 69,300

[spencer.martell]

Answer to Question 1

Net accounts receivable is the amount of cash a company can reasonably expect to collect from its accounts receivable. Both the matching principle and conservatism provide support for the allowance method. In order not to overstate net income, estimated bad debts expense should be recorded in the same period as the related sale (matching). In order not to overstate assets, accounts receivable should be reported net of the allowance for uncollectible accounts (conservatism). External users of accounting information rely on net income and asset values when making decisions about doing business with, or buying ownership in, a company.

Answer to Question 2

c