Bad Debt Expense Explained | Direct Write-Off vs Allowance Method
In this video, we will dive into the crucial topic of the valuation of accounts receivable and the calculation of its net realizable value. ⬇️⬇️⬇️
We detail two methods for handling uncollectible accounts: the Direct Write-off Method and the allowance method. Understanding these accounting concepts is crucial for preparing accurate financial statements and managing bad debts effectively.
Recommended Videos:
Accounts Receivable & The Allowance for Doubtful Accounts • Master Accounts Receivable in 12 Minutes!
Journalizing A/R Transactions • Journalize A/R Transactions Like a PRO!
Estimating Doubtful Accounts • Estimate Doubtful Accounts Like a PRO!
Determining Bad Debt Expense Using the Percentage-of-Receivables Approach • Master Bad Debt Accounting | The Percentag...
Financial Assets: Overview • Understand Financial Assets in Less than 1...
Accounting for Notes Receivable • Master Accounting for Notes Receivable lik...
Financial Assets: Short-Term Investments and Accounting for Marketable Securities • Master Accounting for Marketable Securitie...
Petty Cash • Learn How to Account for Petty Cash Like a...
The Accounting Equation and the Rules of Debit and Credit • Mastering Debit and Credit Made Easy!
Timeline:
00:00 Introduction
00.27 What are Accounts Receivable, with Example
00:59 Accounts Receivable Classification
01:12 Why the Concept of Net Realizable Value is Important
01:38 Accounting for Uncollectible Accounts Methods (Direct Write-off and the Allowance Methods)
03:01 EXAMPLE with calculations: What is the net amount expected to be collected of Stuart's receivables on December 31, 2024?
05:59 Presentation of A/R on the Balance Sheet
05:24 REAL WORLD EXAMPLE: Tesla. How Tesla Reports its A/R
06:35 Recommended Videos and Playlists
The textbook used in this video: Financial Accounting, Jan R. Williams. Publisher: McGraw-Hill. Chapter 6 (18e).
Additional resources:
https://www.amsa-online.com/free-reso...
American Modern School of Accounting is a nonprofit online vocational school that offers several programs to help adult learners to start or advance their careers in bookkeeping and accounting.
We offer the following programs:
• Certificate in Computerized Accounting with QuickBooks
• Certificate in Computerized Bookkeeping with QuickBooks
• Certificate in Computerized Bookkeeping with QuickBooks (Budget Plan)
For more information, visit our website: https://www.amsa-online.com/
#NetRealizableValue, #Valuation, #ValuationOfAccountsReceivable, #ValuationOfAR, #DeterminingBadDebtExpense, #PercentageOfReceivablesApproach, #AccountsReceivableMethod, #AllowanceForDoubtfulAccounts, #AllowanceForBadDebts, #AllowanceForUncollectibleAccounts, #AccountsReceivable, #BadDebts, #FinancialAssets, #FinancialAccounting, #GAAP, #AccountingConcepts, #FinancialStatements, #AccrualAccounting, #Education, #Accounting, #AccrualAccountingConcepts, #RulesofDebitandCredit, #GeneralLedger, #LedgerAccount, #AdjustingJournalEntry, #JournalEntry, #GeneralJournalEntry, #AR #UncollectibleAccounts
Get vidIQ to grow your channel faster! 🚀
https://vidiq.com/AccountingwithIa