What is the cost of marginal bad debts under the proposed plan? (See Table 14.5) A) $383 B) $765 C) $3,315 D) $5,100 ANSWER C
Date: September 19th, 2020
What is the net result of implementing the proposed plan? (See Table 14.5) A) $3,952 B) $3,869 C) $2,084 D) -$2,084 ANSWER A
Date: September 19th, 2020
A firm is considering relaxing credit standards, which will result in annual sales increasing from $1.5 million to $1. 75 million, the cost of annual sales increasing from $1,000,000 to $1,125,000, and the average collection period increasing from 40 to 55 days. The bad debt loss is expected to increase from 1 percent of sales […]
Date: September 19th, 2020
A firm is considering relaxing credit standards which will result in an increase in annual sales from $3 million to $3. 75 million, a decrease in the cost of annual sales from $2,225,000 to $2,000,000, an increase in additional profit contribution from sales of $10,000, and an increase in the average collection period of 15 […]
Date: September 19th, 2020
Credit Scoring Policy Jia’s Jewelry uses the credit scoring technique to evaluate retail applications. The financial and credit characteristics considered and weights indicating their relative importance in the credit decision are shown above. The firm’s credit standards are to accept all applicants with credit scores of 85 or more, to extend limited credit to applicants […]
Date: September 19th, 2020
Increasing the length of the credit period can increase sales, but both the investment in accounts receivable and bad debt expenses are likely to increase as well. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following is a major external source of credit information? A) suppliers B) bank checking C) customers D) distributors ANSWER B
Date: September 19th, 2020
If a firm relaxes its credit standards, the volume of accounts receivable increases and so does the firm’s carrying cost. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following is true of credit scoring of suppliers? A) It is frequently used in business because the scoring information is easy to obtain. B) It is frequently used in business because scoring standards are too flexible. C) It is frequently not used in business because most business transactions involve mercantile credit which […]
Date: September 19th, 2020
A relaxation of credit standards is expected to affect profits positively due to lower carrying costs, whereas tightening credit standards would affect profits negatively as a result of higher carrying costs. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
