Effective credit management involves establishing credit standards for extending credit to customers, determining the company's credit terms, andsetting up procedures for invoicing and collecting past-due accounts.The following statement refers to a credit management policy. Select the best term to complete the sentence.The conditions of the credit sale, including cash discounts and due dates, are indicated by the company's credit standardsConsider the case of Sombra Corp.:Sombra Corp. has a very attractive credit policy, and none of its customers pays in cash when the firm makes a sale. Sombra Corp. sellsto its customers on credit terms of 1/10, net 30.If a customer bought $100,000 worth of goods and paid the firm cash eight days after the sale, how much cash would Sombra Corp. get from thecustomer?$90,000O $105,000$82,500$99,000If the customer paid off the account after 15 days, Sombra Corp. would receiveApproximately 35% of Sombra Corp.'s customers take advantage of the discount and pay on the 10th day. The remaining 65% take an average of 35days to pay off their accounts. What is Sombra Corp.'s days sales outstanding (DSO), or the average collection period?O 24.94 daysO 27.56 days28.88 days26.25 days

Discount is the amount to be paid less than stated amount and is given for early payment before due…

O $90,000 O $105,000 O $82,500 O$99,000 ustomer paid off the account after 15 days, Sombra Corp. would receive mately 35% of Sombra Corp.'s customers take advantage of the discount and pay on the 10th day. The remaining 65% take pay off their accounts. What is Sombra Corp.'s days sales outstanding (DSO), or the average collection period? O24.94 days O27.56 days O 28.88 days

O $90,000 O $105,000 O $82,500 O$99,000 ustomer paid off the account after 15 days, Sombra Corp. would receive mately 35% of Sombra Corp.'s customers take advantage of the discount and pay on the 10th day. The remaining 65% take pay off their accounts. What is Sombra Corp.'s days sales outstanding (DSO), or the average collection period? O24.94 days O27.56 days O 28.88 days

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 3MC: If a customer pays with a credit card and the service has been provided, which of the following...

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Effective credit management involves establishing credit standards for extending credit to customers, determining the company’s terms of credit, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence. The conditions of the credit sale, including cash discounts and due dates, are indicated by the company’s (______) . Consider the case of Newtown Co.: Newtown Co.’s CFO has decided to take a closer look at the company’s credit policy. Newtown Co. has annual sales of $402.8 million, and it currently has an accounts receivable balance of $47.6 million. The first step in analyzing the firm’s credit policy is to determine its days sales outstanding (DSO). Based on this information, Newtown Co.’s DSO is (_____) . (Note: Use 365 days as the length of a year in all calculations. Do not round intermediate calculations. Round your answer to one…
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Question: The credit worthiness of a customer is normally checked by the organization's Credit Control Department, before any credit sales is approved. reqiured: state why this process is important?
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