Allowance For Doubtful Accounts - Accounts Receivable.txt -...

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Allowance For Doubtful Accounts - Accounts Receivable00:00:00Welcome to Introduction to Accounting, Preparing for a User's Perspective.00:00:05Allowance for Doubtful Accounts.00:00:07Imagine you are reviewing a company's balance sheet and you see the following$94,000 asset.00:00:13Accounts receivable, net of allowance for doubtful accounts of $2,000 = $94,000.00:00:20What does this $94,000 asset really represent?00:00:24If it is net of allowance for doubtful accounts of $2000.00:00:28What it means is that, although the company's customers owe it a gross accountsreceivable amount of $96,000, the company's management estimates at $2000 of suchamount is Doubtful.00:00:42And therefore has allowed for $2,000 of potential bad debts as being doubtfulaccounts.00:00:49This $2,000 estimated doubtful accounts amount is then deducted from the $96,000 tobetter reflect what management really believes it will ultimately collect in cash,which is only $94,000.00:01:02Thus management believes the probable future economic benefit of its $96,000 ofaccounts receivable, is only $94,000 not $96,000.

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Term
Summer
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1 000, 2 000, 21 000, 22 000, 94 000

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