A Firm's Credit Selection Procedures Must Be Established on a Sound

question 177

True/False

A firm's credit selection procedures must be established on a sound economic basis that considers the costs of investigating the creditworthiness of a customer and the expected size of its credit purchases.

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Definitions:

Specific Identification

Specific identification is an inventory valuation method that tracks the cost of individual items in inventory and matches those costs with the items' actual sale.

Inventory System

A method for tracking the quantities, locations, and statuses of products a company has in stock, both for sales and production purposes.

Computerized

Systems or processes that are performed or managed by computers, typically involving automation of manual tasks.

Cost Flow Assumption

An accounting method used to determine the cost of goods sold and ending inventory, such as FIFO, LIFO, or average cost.