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:

Blockage

An obstruction that prevents movement or flow, often within a pipe, tube, or other passage in the body.

CT Scan

Computerized Tomography Scan; a medical imaging technique that uses computer-processed combinations of X-ray measurements taken from different angles to produce cross-sectional images of specific areas of a scanned object, allowing the user to see inside without cutting.

Cross-sectional View

An image or representation of an object or body part cut transversely, allowing internal structures to be viewed as if on a single plane.

Radiographic Examination

The use of X-rays to view and diagnose conditions inside the body by creating images of internal structures.