For Accounts Receivable,with Respect to Cost Trade-Offs the Costs That

question 82

Multiple Choice

For accounts receivable,with respect to cost trade-offs the costs that must be evaluated are:

• A) the cost of investment in accounts receivable and bad debts and the opportunity cost of lost sales due to overly restrictive credit policy and/or terms.
• B) carrying costs and order and setup costs associated with replenishment and production of finished goods.
• C) costs of reduced liquidity and financing costs resulting from the use of less expensive short-term financing.
• D) none of the above

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Definitions:

Liability

A company's legal financial debts or obligations that arise during the course of business operations.

Prepaid Insurance

Payments made in advance for insurance coverages, recognized as assets until the coverage period lapses and it then becomes an expense.

Fiscal Year

A one-year period that companies use for accounting and financial reporting purposes, which may or may not coincide with the calendar year.

Unexpired Insurance

The portion of an insurance premium that has not yet been used up and is considered a prepaid expense for the company.