A Firm's Collection Policy, I

question 127

True/False

A firm's collection policy, i.e., the procedures it follows to collect accounts receivable, plays an important role in keeping its average collection period short, although too strict a collection policy can reduce profits due to lost sales.

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Definitions:

Negotiability

The characteristic of a financial tool that permits its transfer or assignment from one entity to another in return for value.

Preponderance Of The Evidence

A standard of proof in civil cases, requiring that a party's argument is more likely to be true than not based on presented evidence.

Manner Of Performance

Refers to the way in which an obligation, task, or duty is to be executed or fulfilled according to the terms of an agreement or contract.

IOU

An informal document that acknowledges a debt owed.