A ______________ Factor of Credit Policy Effects Occurs When a Firm

question 104

Multiple Choice

A ______________ factor of credit policy effects occurs when a firm that institutes changes in its existing credit policy finds that, as a result, some of its customers choose to pay early to take advantage of the new terms.

• A) Cost.
• B) Cost of debt.
• C) Revenue.
• D) Probability of nonpayment.
• E) Cash discount.

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Definitions:

Accounts Classified

The organization of accounts into categories within financial statements, typically as assets, liabilities, equity, revenue, and expenses.

Ledger

A book or collection of financial accounts where all transactions are recorded, usually divided into debits and credits.

Financial Statements

Reports that provide an overview of a company’s financial condition, including the balance sheet, income statement, and cash flow statement.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure that a company's bookkeeping system is mathematically correct.