If a Company Did Not Extend Credit to Customers

question 125

Multiple Choice

If a company did not extend credit to customers:

• A)gross revenue would increase.
• B)costs would increase but so would its revenue.
• C)costs would decrease but so would its revenue.
• D)gross profit would increase.

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Definitions:

Common Stock

Equity ownership in a corporation, giving shareholders voting rights and a share of the company's profits through dividends.

Cumulative Nonparticipating Preferred Stock

A type of preferred stock that accumulates unpaid dividends but does not have a right to share in the company's earnings beyond the agreed rate.

Cash Dividends

Payments made by a company to its shareholders out of the company's profits in the form of cash.

Fair Market Value

It's the price at which an asset would change hands between a willing buyer and a willing seller, each having reasonable knowledge of all necessary facts.