An Advantage of Offering Lenient Credit Terms Is That It

question 7

Multiple Choice

An advantage of offering lenient credit terms is that it can help a firm:

• A) decrease its debt.
• B) increase its sales.
• C) reduce its risk associated with financial leverage.
• D) improve cash flows from an investment.

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Definitions:

Double Rule

A method used in accounting to underline totals for certain accounts or figures, indicating a sum or conclusion.

Closing Process

The series of steps performed at the end of an accounting period to prepare the books for the next period, including updating accounts and transferring balances.

Income Summary

An account in the ledger that aggregates all income and expense accounts to determine the net profit or loss for a certain period.

Revenue Accounts

Accounts that track the income generated from a company's primary operations and activities.