Table 15.6 A Breakdown of Teffan, Inc.'s Outstanding Accounts Receivable Dated June

question 125

Multiple Choice

Table 15.6
A breakdown of Teffan, Inc.'s outstanding accounts receivable dated June 30, 2014 on the basis of the month in which the credit sale was initially made follows. The firm extends 30-day credit terms.
-A decrease in collection efforts by a firm will result in ________ in sales volume, ________ in the investment in accounts receivable, ________ in bad debt expenses, and ________ in collection expenditures.

• A) an increase; an increase; an increase; a decrease
• B) an increase; a decrease; an increase; an increase
• C) an increase; a decrease; an increase; a decrease
• D) a decrease; a decrease; a decrease; an increase

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Definitions:

EBIT

Earnings Before Interest and Taxes - a measure of a firm's profitability that excludes interest and income tax expenses.

Accounts Payable

Liabilities representing amounts owed by a company to suppliers for goods and services received but not yet paid for.

Liability

A financial obligation or debt that an individual or company owes, which is required to be paid to creditors.

Manufacturing Firm

A company engaged in the transformation of raw materials, components, or parts into finished goods that meet a market's demand.