Which is correct with regards to the effects of restricting credit standards? a. Investment in accounts receivable will likely increase b. An increase in recognition of doubtful accounts expense will probably happen c. Positive impact on the net profit can be noted from decline in the quantity of goods sold

Which is correct with regards to the effects of restricting credit standards? a. Investment in accounts receivable will likely increase b. An increase in recognition of doubtful accounts expense will probably happen c. Positive impact on the net profit can be noted from decline in the quantity of goods sold

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 11MC: Which of the following best represents a positive product of a lower number of days sales in...

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7.-What are the likely effects on sales of the following change in credit policy: A) Lower the salary level required of credit applicants. A) Decrease the discounts for prompt payment. B) Increase the percentage of uncollectible accounts. C) Decrease sales volumes D) Increase sales volume
Question Which of the following changes in credit standards and conditions would cause an improvement in profit? A) An increase in the percentage of doubtful collections. B) An increase in collection expenses. C) Decrease in units sold D) Increase in the turnover of accounts receivable.
A change in credit policy has caused an increase in sales, an increase in discounts taken, a reduction in the investment in accounts receivable, and a reduction in the number of doubtful accounts. Based upon this information, we know that a)Net income has increased b)The average collection period has decreased. c)Gross profit has declines d)The size of of the discount offered has increased
Question Which of the following changes in credit standards and conditions would cause an improvement in profit? A) Increase in the turnover of accounts receivable B) Decrease in units sold C) Increase in collection expenses D) An increase in the percentage of doubtful accounts receivable.
Which of the following best represents a positive product of a lower number of days sales in receivables ratio? A. collection of receivables is quick, and cash can be used for other business expenditures B. collection of receivables is slow, keeping cash secured to receivables C. credit extension is lenient D. the lender only lends to the top 10% of potential creditors
Suppose customers express greater satisfaction with the accuracy of their charge account bills but the performance measures for the average age of accounts receivable and for bad debts do not improve. Explain why this might happen.
Statement I - Relaxation of Credit Standard increases the Investment in Accounts receivableStatement II - Restriction of credit standard may decrease the chance of incurring bad debts that ultimately affects the profit positively a. False; True b. True; False c. False; False d. True; True Which of the following statements is most correct? a. Other things held constant, the higher a firm’s days sales outstanding (DSO), the better its credit department. b. If a firm sells on terms of 2/10, net 30, and its DSO is 30 days, then its aging schedule would probably show some past due accounts. c. If a firm that sells on terms of net 30 changes its policy and begins offering all customers terms of 2/10, net 30, and if no change in sales volume occurs, then the firm’s DSO will probably increase.
7. What does an increasing collection period for trade receivable suggest about a firm’s credit policy? A. The business is making profits. B. The credit policy is too restrictive. C. The credit policy may be too lenient. D. The business is probably losing qualified customers. E. The collection period has no relationship to a business’s credit policy.
Which of the following statement is true ? Answer choices : I. Increase in collection of cash from customer will lead to decrease in days of payable outstanding . II . Increase in credit sales of the company will lead to increase in days of payable outstanding . III . Decrease in average accounts payable will cause decrease in accounts payable turnover ratio . IV . All the above statements are false .
Which of the following is a benefit of selling on credit? Select one: Expenses are reduced by making sales to a wide range of customers. Revenues are increased by making sales to a wider range of customers. Cash is received sooner. Some customers do not pay, creating an expense. Clear my choice
Indicate the most likely effect of the following changes in credit policy on the receivables turnoverratio and days to collect ( 1 for increase, 2 for decrease, and NE for no effect).a. Granted credit with shorter payment deadlines.b. Granted credit to less-creditworthy customers.c. Increased effectiveness of collection methods.
What is the effect of extending the collection period for accounts receivable? The collection cost will be reduced. Cash flows from operations may be higher than expected for the company’s sales. The company should expand operations with its excess cash. Bad debt expense will generally be higher.