Consumer Credit Has Become a Popular Way of Making Routine

question 17

Multiple Choice

Consumer credit has become a popular way of making routine purchases because:

• A)individuals can restrict their spending.
• B)taking more credit will increase consumers' credit scores.
• C)the availability of different types of credit is abundant.
• D)consumer credit cannot be used for emergencies.
• E)no interest is charged when credit is used for large outlays.

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Definitions:

Allowance Method

A method in accounting that involves estimating the accounts that are uncollectible at the end of each period to account for bad debts.

Receivables

Amounts owed to a company by customers or other parties as a result of the company providing goods or services on credit.

Bankruptcy

A judicial process concerning an individual or enterprise that cannot fulfill its debt obligations.

Service Contract

A formal agreement between a service provider and a client, detailing the terms of service to be rendered.