Asked by Hunain Nadeem on Jun 01, 2024
Verified
Which of the following is an incorrect statement of an issue involved in receivables management?
A) Easier credit increases sales
B) Easier credit increases bad debt losses
C) Easier credit lowers the cost of financing receivables
D) Easier credit improves customer relations
Financing Receivables
The process of obtaining funds by selling accounts receivable to a financier or through factoring.
Easier Credit
Conditions under which banks make more loans available to customers with lower interest rates and less stringent qualification criteria.
- Understand the diverse approaches to accounts receivable management and their implications for a corporation's financial stability.
Verified Answer
KS
Kalyn SchmidtJun 02, 2024
Final Answer :
C
Explanation :
Easier credit may increase sales (A) and improve customer relations (D), but it may also increase bad debt losses (B) as customers may not pay their debts. Easier credit may also increase the cost of financing receivables, as more money will be tied up in accounts receivable for a longer period of time, potentially leading to higher interest charges and administrative costs. Therefore, statement C is incorrect.
Learning Objectives
- Understand the diverse approaches to accounts receivable management and their implications for a corporation's financial stability.
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