The Primary Purpose of Credit Analysis Is To

question 65

Multiple Choice

The primary purpose of credit analysis is to:

• A) determine the optimal credit period.
• B) analyze the effects of granting a cash discount.
• C) determine the optimal discount period, if any.
• D) summarize the frequency and amount of sales by customer.
• E) evaluate whether or not a customer will pay.

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Definitions:

Permanent

Refers to accounts or records in the general ledger that are not closed at the end of the accounting period, such as assets, liabilities, and equity accounts.

Temporary

Not permanent; lasting for a limited period of time or intended for short-term use.

Employer's Payroll Tax

Taxes that employers are required to pay on behalf of their employees, which may include contributions to social security, Medicare, and unemployment taxes.