A firm’s credit terms cover ________. A) credit standards B) lines of credit C) cash discount period D) credit scoring ANSWER C
Date: September 19th, 2020
The most stringent step in the collection process is ________. A) letters B) personal visits C) collection agencies D) legal action ANSWER D
Date: September 19th, 2020
The first step in the collection of overdue accounts is ________. A) a letter B) contacting a collection agency C) legal actions D) a personal visit ANSWER A
Date: September 19th, 2020
2/15 net 45 translates as ________. A) 15 percent cash discount if paid in 2 days, net 45-day credit period B) 45 percent of account due in 15 days, payment prior to day 15 receives a 2 percent discount C) 2 percent cash discount if paid prior to 15 days, if customer does not take […]
Date: September 19th, 2020
A technique that provides an analyst with the information concerning the proportion of each type of account that has been outstanding for a specified period of time is called ________. A) credit analysis B) credit scoring C) aging of receivables D) the economic order quantity model ANSWER C
Date: September 19th, 2020
Maggie’s Gold Coins, Inc is considering shortening its credit period from 30 days to 20 days and believes, as a result of this change, its average collection period will decrease from 36 days to 30 days. Bad debt expenses are also expected to decrease from 1.2 percent to 0.8 percent of sales. The firm is […]
Date: September 19th, 2020
If the level of bad debt attributable to credit policy is relatively constant, increasing collection expenditures can be expected to reduce bad debts. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following is true of a credit applicant’s character? A) It reflects a credit applicant’s ability to repay his debt obligation. B) It reflects a credit applicant’s past payment history. C) It reflects the level of liquid assets available with a credit applicant. D) It reflects any unique conditions surrounding a credit applicant’s […]
Date: September 19th, 2020
If a firm increases its cash discount period, the firm’s investment in accounts receivable due to non-discount takers now paying earlier is expected to decrease. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
As credit standards are relaxed, sales are expected to ________ and the investment in accounts receivable is expected to ________. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase ANSWER A
Date: September 19th, 2020
