When the Credit Manager Decides a Customer's Account Is Considered

question 46

Multiple Choice

When the credit manager decides a customer's account is considered to be uncollectible, the decision should be reviewed by the controller to:

• A)Ensure the bad debts account is within budget.
• B)Ensure the credit manager has not written off the account as a favour to a friend.
• C)Begin a lawsuit to collect the money.
• D)Inform the police.

---

Definitions:

Real Risk-free Rate

The theoretical return on an investment with zero risk, taking into account the effects of inflation, thus representing the true purchasing power of the investment return.

Expected Inflation

The anticipated rate at which the general level of prices for goods and services will rise over a period of time.

Dividend-payout Ratio

A financial ratio that shows the percentage of a company's earnings paid to shareholders in the form of dividends, reflecting a company's dividend policy.

Anticipated Growth Rate

The expected rate at which a company, asset, or economy is predicted to grow over a certain period of time.