A Reasonable Amount of Uncollectible Accounts Is Evidence

question 96

Multiple Choice

A reasonable amount of uncollectible accounts is evidence

• A) that the credit policy is too strict.
• B) that the credit policy is too lenient.
• C) of a sound credit policy.
• D) of poor judgments on the part of the credit manager.

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Definitions:

Freight

Costs associated with the transportation of goods, often recognized separately on financial documents for accounting purposes.

Discount Period

The time frame within which a payment can be made at a discounted rate from the total outstanding amount, incentivizing early payments.

Inventory

The goods or materials a business holds for the purpose of resale or production.

Cash Sales

Transactions where payment for goods or services is made immediately in cash at the time of sale.