Which of the Following Characteristics Will Tend to Cause a Firm

question 61

Multiple Choice

Which of the following characteristics will tend to cause a firm to adopt a more liberal credit policy? I. repeat customers
II) excess capacity
III) high variable costs
IV) limited competition

• A) I and II only
• B) III and IV only
• C) I, II, and III only
• D) II, III, and IV only
• E) I, II, III, and IV

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Definitions:

FOB Shipping Point

A shipping term indicating that a buyer assumes ownership and responsibility for goods at the seller's location, and thus is responsible for freight costs and any associated risks during transportation.

Inventory Writedown

An accounting process that reduces the carrying value of inventory to its market value or below, reflecting decreased value in the asset.

Net Realizable Value

The estimated selling price of goods, minus the cost of their sale or disposal, used in inventory valuation and accounts receivable.

FIFO

An inventory valuation method known as "First-In, First-Out," where goods purchased or produced first are sold or used first.