The Four Primary Elements in a Firm's Credit Policy Are

question 54

True/False

The four primary elements in a firm's credit policy are (1) credit standards, (2) cash discounts offered, (3) credit period, and (4) collection policy.

---

Definitions:

Investment Centre

A business unit or division that is responsible for generating returns on the assets allocated to it, with managers typically evaluated on profitability and the efficiency of asset utilization.

Suboptimal Decisions

Choices or decisions made that are not the best possible ones, often resulting in less efficient or effective outcomes than could have been achieved.

Decentralisation

The distribution of decision-making power and operational responsibilities away from a central authority to lower levels in an organization.

Responsibility Accounting

An accounting system that collects, summarizes, and reports financial information related to the responsibilities of individual managers or departments.