Which of the Following Statements Is Most Correct

question 34

Multiple Choice

Which of the following statements is most correct?

• A) It is possible for a firm to overstate profits by offering very lenient credit terms which encourage additional sales to financially "weak" firms.A major disadvantage of such a policy is that it is likely to increase uncollectible accounts.
• B) A firm with excess production capacity and relatively low variable costs would not be inclined to extend more liberal credit terms to its customers than a firm with similar costs that is operating close to capacity.
• C) Firms use seasonal dating primarily to decrease their DSO.
• D) Seasonal dating with terms 2/15, net 30 days, with April 1 dating, means that if the original sale took place on February 1st, the customer can take the discount up until March 15th, but must pay the net invoice amount by April 1st.
• E) If credit sales as a percentage of a firm's total sales increases, and the volume of credit sales also increases, then the firm's accounts receivable will automatically increase.

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Definitions:

Disciplinary Cases

Instances or situations where rules or standards are violated, leading to an investigation and possible enforcement actions or penalties.

Investigative Interview

A structured conversation designed to gather information, usually in the context of workplace investigations or legal inquiries.

Disciplinary Case

An instance where an employee's behavior or performance has violated company policies, leading to a formal review and possible action under a disciplinary system.

Open-door Policy

A managerial approach that encourages employees to communicate openly with management without fear of repercussion.