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
Which of the following is true of cash discount? A) It increases bad debts because after availing discounts all customers may not pay. B) It decreases the investment in accounts receivable and increases the per unit profit. C) It helps to speed up collections without putting pressure on customers. D) It reduces sales because the […]
Date: September 19th, 2020
When a firm initiates or increases a cash discount, sales are expected to ________, the investment in accounts receivable is expected to ________, the bad debt expense is expected to ________, and the profit per unit is expected to ________. A) decrease; increase; increase; increase B) decrease; decrease; increase; increase C) increase; increase; decrease; decrease […]
Date: September 19th, 2020
When a firm decreases or cancels a cash discount, sales are expected to ________, the investment in accounts receivable is expected to ________, the bad debt expense is expected to ________, and the profit per unit is expected to ________. A) decrease; increase; increase; increase B) decrease; decrease; increase; increase C) increase; increase; decrease; decrease […]
Date: September 19th, 2020
If the cash discount period is increased, a firm’s investment in accounts receivable is expected to ________. A) increase because existing customers attracted by the new policy will buy more products B) decrease because of non–discount takers paying earlier to avail the cash discount C) decrease because discount takers will pay more in order to […]
Date: September 19th, 2020
Which of the following is true of changes in cash discount period? A) If a firm increases its cash discount period, the sales are expected to decrease, the bad debts are expected to decrease, and the profit per unit is expected to increase. B) If a firm decreases its cash discount period, the sales are […]
Date: September 19th, 2020
If a firm’s credit period is increased, the sales volume can be expected to ________, the investment in accounts receivable can be expected to ________, and the bad debt expenses can be expected to ________. A) increase; decrease; decrease B) increase; increase; decrease C) increase; increase; increase D) decrease; decrease; decrease ANSWER C
Date: September 19th, 2020
The net effect of changes in a cash discount period is quite difficult to analyze because they are directly attributable to the three forces affecting a firm’s investment in accounts receivable. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
If a firm’s credit period is decreased, the sales volume can be expected to ________, the investment in accounts receivable can be expected to ________, and the bad debt expenses can be expected to ________. A) increase; decrease; decrease B) increase; increase; decrease C) increase; increase; increase D) decrease; decrease; decrease ANSWER D
Date: September 19th, 2020
