When Credit Policy Is at the Optimal Point, The

question 280

Multiple Choice

When credit policy is at the optimal point, the:

• A) Total costs of granting credit will be maximized.
• B) Carrying costs of credit will be equal to zero.
• C) Opportunity cost of credit will be equal to zero.
• D) Carrying costs will equal the opportunity costs.
• E) Total costs will equal the opportunity costs.

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Definitions:

Long-Lived Assets

Assets with a useful life extending beyond one year, used in the operation of a business, such as equipment or buildings.

Allocated To Expense

A method of assigning or distributing costs among various accounts or periods as expenses.

Net Income

The net earnings of a business following the subtraction of all costs and taxes from the gross income.

Predictor

A statistical measure or model used to estimate future trends or outcomes based on historical data.