Which of the Following Is True of Credit Scoring

question 250

Multiple Choice

Which of the following is true of credit scoring?

• A) It audits the amount of assets the applicant has available for use in securing the credit.
• B) It specifies the terms of sale for customers who have been extended credit by a firm.
• C) It is an ongoing review of a firm's accounts receivable to determine whether customers are paying according to the stated credit terms.
• D) It applies statistically derived weights to an applicant's scores on key financial and credit characteristics.

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Definitions:

Timeliness

The provision of information to users quickly enough for it to influence their decisions, a crucial aspect in financial reporting.

Accounting Assumptions

Foundations that underlie the financial statements, such as the assumption that a company will continue to operate (going concern assumption).

Conventions

Established practices or agreed-upon methods in accounting that guide the preparation and presentation of financial statements.

Recognition Criteria

The conditions that must be met for a particular item to be included on the financial statements, ensuring transactions are recorded in the correct accounting period.