Asked by Mercedez Miller on Jul 05, 2024
Verified
Which one of the following customers is most apt to be granted the most liberal credit terms?
A) One-time customer who will not be returning.
B) One-time customer who has the potential of being a large volume customer.
C) Long-standing cash customer who buys in small volume.
D) Repeat customer who will always be a small volume customer.
E) Repeat customer who has the potential of being a large volume customer.
Credit Terms
Credit terms are the conditions under which a seller extends credit to a buyer, specifying the repayment period, discount for early payment, and applicable interest charges.
Liberal Credit Terms
Credit conditions that are more favorable to the borrower, such as longer repayment periods or lower interest rates.
- Identify the elements that affect credit conditions and their effects on the cash flows of buyers and sellers.
Verified Answer
JM
Johana Medrano-RoweJul 11, 2024
Final Answer :
E
Explanation :
Repeat customers with the potential of becoming large volume customers are often granted the most liberal credit terms. This is because they represent a significant future revenue opportunity for the business, and offering favorable credit terms can help secure their loyalty and encourage larger purchases.
Learning Objectives
- Identify the elements that affect credit conditions and their effects on the cash flows of buyers and sellers.
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