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.

---

Definitions:

Product

An item or service created through a process and offered for sale to satisfy wants or needs of consumers.

Service

Activities or functions provided by one party to another, often in exchange for payment, that do not result in the ownership of anything.

Viral Marketing

A marketing strategy that encourages individuals to share a marketing message, often through social media, to spread information about a product or service rapidly.

Social Media

Social media encompasses websites and applications that enable users to create and share content or to participate in social networking.