A Large Manufacturing Firm Has Been Selling on a 3/10

question 1

Multiple Choice

A large manufacturing firm has been selling on a 3/10, net 30 basis. The firm changes its credit terms to 3.5/9, net 25. What change might be expected on the balance sheets of its customers?

• A) decreased receivables and increased bank loans
• B) increased receivables and increased bank loans
• C) decreased payables and increased bank loans
• D) increased payables and increased bank loans

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Definitions:

Medium Of Exchange

An intermediary instrument used to facilitate the sale, purchase, or trade of goods and services by eliminating the need for a coincidence of wants in barter transactions.

Poverty Alleviation

Refers to strategies and initiatives aimed at reducing the number of people living in poverty.

Economic Wellbeing

A measurement of how well individuals and societies can fulfill their needs and wants, often associated with income, employment, and quality of life.

National Income

The total value of all goods and services produced by a country over a specific period, typically a year, including income from abroad.