Which of the Following Statements Is Correct

question 69

Multiple Choice

Which of the following statements is correct?

• A) If a firm's volume of credit sales declines,then its DSO will also decline.
• B) If a firm changes its credit terms from 1/20,net 40 days,to 2/10,net 45 days,the impact on sales can't be determined because the increase in the discount is offset by the longer net terms which tends to reduce sales.
• C) The DSO of a firm with seasonal sales can vary because while the sales per day figure is usually based on the total annual sales,the accounts receivable balance will be high or low depending on the season.
• D) An aging schedule is used to determine what portion of customers pay cash and what portion buy on credit.
• E) Aging schedules can be constructed from the summary data provided in the firm's financial statements.

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Definitions:

Social Environment

The immediate physical and social setting in which people live or in which something happens or develops, including the cultural, economic, political, and social conditions that influence people's lives.

Information Processing Theory

A theory in psychology that likens the human mind to a computer, focusing on how people process stimuli that they encounter, including how they attend to, perceive, remember, and retrieve information.

Piaget

A Swiss psychologist famed for his theories of cognitive development in children, identifying stages of mental growth from infancy to adolescence.

Longitudinal Research Design

A research methodology that studies the same subjects over a period of time, potentially revealing development or changes.