There Are Advantages and Disadvantages to Extending Credit to Customers

question 142

Multiple Choice

There are advantages and disadvantages to extending credit to customers.Which of the following statements below expresses the general reason for extending credit?

• A)Lower sales revenues exceed bad debt savings.
• B)Wage cost savings exceed delayed receipt of cash.
• C)Gross profits exceed bad debt costs.
• D)The speed of cash receipts exceeds bad debt costs.

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Definitions:

Internal Controls

Processes and procedures implemented to assure integrity and accuracy of financial and operational information, prevent fraud, and protect the assets of the organization.

Certification

The process of officially recognizing someone or something as having met certain standards through the issuance of a document or label.

Bank Reconciliation

The procedure of aligning the figures in a company's bookkeeping records for a cash account with the equivalent data on a bank statement.

External Auditors

External auditors are independent accounting professionals who examine the financial statements of an organization to ensure accuracy and compliance with applicable standards and regulations.