The Accounts Receivable Approach to Credit Policy Supports the Theory

question 49

Multiple Choice

The accounts receivable approach to credit policy supports the theory that:

• A)a firm's risk of offering credit to a new customer is limited to the variable cost of the sold items.
• B)the best credit policy is an all-cash policy.
• C)the cost of offering credit to a new customer is the same as the cost of offering credit to an existing customer.
• D)foregoing cash discounts is a method of obtaining inexpensive short-term financing.
• E)the default risk of a credit policy is the same as the default risk under an all cash-policy if your customers remain the same.

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Definitions:

Servicescapes

The physical environment in which service encounters take place, including all elements that influence interactions between customers and service providers.

Ambient Conditions

Ambient conditions refer to the surrounding environmental factors, like temperature, humidity, and air pressure, that can influence a system or process.

Cellular Production

An approach to manufacturing where equipment and workstations are arranged in a close sequence that facilitates the processing of small batches of parts or products through a series of closely related operations.

Group Technology Codes

A classification system used in manufacturing to group parts into families based on similarities in design or manufacturing process.