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Accountants use net relizable value in evaluation; as it is more prudent, it takes into account the depreciation of an asset. This gives a more realistic value and is a better measure of an asset.
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How would you define net realizable value?
Net realizable value. The amount a firm can collect in cash by selling an item, less the costs (such as commissions and delivery costs) of disposition.
Which one of the approaches for the allowance procedure emphasizes the net realizable value of accounts receivable on the balance sheet?
Which one of the approaches for the allowance procedure emphasizes the net realizable value of accounts receivable on the balance sheet?
What is Expected sales price less selling cost?
Its the net realizable value
How would you define a current cost?
Current cost. Replacement cost or net realizable value.
How should damaged merchandise that can be sold only at prices below cost be valued at?
Net realizable value
What is the best way that damaged merchandise that can be sold only at prices below cost should be valued at?
Net Realizable Value
Methods of allocating joint production cost to joint products?
Following are methods 1 - Splitoff point method 2 - Net realizable value method
What is the separate valuation principle in Accounting?
The Separate Valuation Principle states that inventory should be valued at the lower of cost (costs minus additional costs to make item saleable ,eg.conversion costs,transportation cost etc.) and its Net Realizable value.
What is The net amount expected to be received in cash from receivables?
The net amount expected to be received in cash from receivables, also known as net realizable value, is the total accounts receivable minus any allowances for doubtful accounts and uncollectible debts. This figure represents the actual cash a company anticipates collecting from its customers after accounting for potential losses. It provides a more accurate reflection of the company's liquidity and financial health.
Is a chartered accountant is eligible for net exam?
Yes.... UGC-NET is compulsory for Chatered Accountants...Exemption is available only for PH.D....
Explain with examples two instances when net realisable value may be lower then cost?
Net realizable value (NRV) may be lower than cost when inventory becomes obsolete, such as outdated electronics that can no longer be sold at their original price. Another instance is when market demand decreases significantly; for example, if a farmer harvests crops but faces a surplus in the market, the selling price may drop below the production cost, leading to a lower NRV. In both cases, companies must write down the inventory to reflect its lower value in financial statements.
What is the rationale for why plant assets are not reported at liquidation value?
Conservatism If a situation arises where there are two acceptable alternatives for reporting an item, conservatism directs the accountant to choose the alternative that will result in less net income and/or less asset amount. Conservatism helps the accountant to "break a tie." It does not direct accountants to be conservative. Accountants are expected to be unbiased and objective.
