Which of the Following Statements Is Incorrect

question 94

Multiple Choice

Which of the following statements is incorrect?

• A) An accounts receivable arises when a business sells goods or services to a third party on credit terms.
• B) The absence of bad debts is an indicator that the credit policy may be too strict and can result in the loss of profits.
• C) The higher the number of customer being supplied on credit and amount of inventories, the lower the working capital requirements.
• D) The failure to allow for uncollectable accounts will cause the owners' equity to be overstated.

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Definitions:

Statistical Models

Representations of complex systems through mathematical formulas and algorithms based on statistical principles.

Dependent Variable

The variable in an experiment or study that is expected to change in response to changes in another variable (the independent variable).

Independent Variables

Variables in an experiment or model that are manipulated or changed to observe their effect on dependent variables, helping to determine causal relationships.

Specific Risk

The risk associated with individual securities or businesses, distinct from overall market risk, that can be mitigated through diversification.