Which of the Following Statements Is CORRECT

question 86

Multiple Choice

Which of the following statements is CORRECT?

• A) if a firm that sells on terms of net 30 changes its policy to 2/10 net 30, and if no change in sales volume occurs, then the firm's dso will probably increase.
• B) if a firm sells on terms of 2/10 net 30, and its dso is 30 days, then the firm probably has some past-due accounts.
• C) if a firm sells on terms of net 60, and if its sales are highly seasonal, with a sharp peak in december, then its dso as it is typically calculated (with sales per day = sales for past 12 months/365) would probably be lower in january than in july.
• D) if a firm changed the credit terms offered to its customers from 2/10 net 30 to 2/10 net 60, then its sales should increase, and this should lead to an increase in sales per day, and that should lead to a decrease in the dso.
• E) other things held constant, the higher a firm's days sales outstanding (dso), the better its credit department.

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute away from more expensive items toward cheaper ones.

Higher Wage

An increased rate of pay provided to employees, typically as a result of increased skill, productivity, or market pressures.

Labor Supply Curve

A graphical representation of the relationship between the wages on the vertical axis and the amount of labor willing to work at that wage on the horizontal axis.

Attitude Toward Work

Attitude toward work refers to an individual's overall outlook, feelings, and perceptions about their work, which can influence their job performance and satisfaction.