Which of the Following Statements Is Correct

question 37

Multiple Choice

Which of the following statements is correct?

• A)The optimal credit policy is determined primarily by the industry in which the firm operates and by current economic conditions.
• B)Normally, when a credit sale is made, inventory is reduced by the cost of goods sold and an equal amount is credited to accounts receivable.
• C)A typical business credit report provides sufficient information to eliminate the need for informed human judgment in the credit decision.
• D)A customer's credit quality is usually determined in terms of the probability of the customer's default.
• E)Computers have had a significant effect in increasing efficiency in the areas of payroll and inventory, but have had little impact in accounts receivable management.

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Definitions:

Ethical Challenge

Situations or problems requiring a person or organization to choose between alternatives that must be evaluated as right (ethical) or wrong (unethical).

Acquisition

The process of obtaining control of another company or business entity through purchase, merger, or other means.

Outstanding Shares

Refers to the total number of shares of a corporation's stock that are owned by shareholders at any given time.

Acquisition Costs

Expenses directly associated with acquiring a new customer or asset, including marketing, sales expenses, and the cost of the goods or services themselves.