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.

Understand the purpose of an adjusted trial balance and its role in the preparation of financial statements.

Grasp the concepts of relevance and faithful representation in financial reporting.

Understand the characteristics of accounting information and the importance of consistency in application.

Describe the assumptions underlying financial accounting, including the economic entity, going concern, and the time period assumption.

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Definitions:

Frequency

The rate at which something occurs over a particular period or in a given sample.

Functional Analysis

A behavioral technique that identifies the antecedents and consequences of behavior to determine the reason or function behind it, commonly used in behavioral psychology.

Nomothetic Approach

An approach focusing on studying what we share with others (laws or generalizations applicable to all members of a population).

Behavioral Diagnosis

A process in psychology used to determine the specific behavior patterns and mental processes underlying an individual's difficulties.