Trade accounts receivable are valued and reported on the balance sheet:

Trade accounts receivable are valued and reported on the balance sheet:

a) in the investment section.

b) only if they are not past due

c) at gross amounts less sales returns and allowances

d) at net realizable value

Answer: c) at gross amounts less sales returns and allowances

Trade accounts receivable; this is simply the sum of the balances owing on customers for goods sold on the account. Finally, in balance sheet, trade accounts receivables remain stated at gross amount which comprises all the amounts to be received in future for sales transactions. However, this gross amount is then decreased for sales returns and allowances that is, estimate of returns or discounts that the company may need to make to customers. Since trade accounts receivable is reported at the gross carrying amount less sales return and allowances, balance sheet conveys a better picture of the amounts expected to be collected from customers. This approach gives a lower figure of the account receivable as it is based on the most conservative estimate of the net realizable value.